By Ann Saphir
SAN FRANCISCO Feb 4 A top U.S. Federal Reserve
official who once called a new round of bond-buying stimulus a
"Wall Sreet fantasy" on Monday said that he would rather cut
back on the Fed's current purchases gradually than stop them
"I don't want to go from wild turkey to cold turkey," Dallas
Fed President Richard Fisher said in an interview with Bloomberg
Radio. Although the Fed has added much more stimulus than he
would have liked, "Now that we are there, I don't think you
stop, I think you taper it off."
The U.S. Federal Reserve last week left in place its monthly
$85 billion bond-buying stimulus plan, reiterating its pledge to
keep up purchases until there is substantial improvement in the
labor market outlook.
The program is known as QE3 because it is the Fed's third
round of quantitative easing, and Fisher was one its most
outspoken opponents before the Fed launched it last September.
Fisher's views are often far wide of the consensus at the
Fed, but this time his perspective appears to be more broadly
Last week St. Louis Federal Reserve President James Bullard
said the Fed should slow down rather than suddenly halt those
purchases once there is enough improvement in the employment
"I feel the same way," said Fisher, who unlike Bullard does
not have a vote on the Fed's policy-setting panel this year.
Bullard supported the Fed's decision last month to keep up the
bond purchases, although like Fisher he was initially an
opponent of QE3.
Atlanta Fed President Dennis Lockhart, who supports QE3, has
also said the Fed could taper its bond purchases when the time
Fisher said he is already seeing improvement in the U.S.
economy, which he expects will grow about 3 percent this year,
but that hiring is still not as robust as he would like, with
businesses not taking enough advantage of low borrowing costs.
Unemployment ticked up to 7.9 percent last month, but hiring
has improved, with payrolls up an average of 200,000 each month
for the past three months.
"I am not worried about price inflation; what I've been
worried about is the efficacy of our policy as it affects job
creation," he said, reiterating his central criticism of current
central bank policy.
"We are always looking at the efficacy of what we do ...If
you feel that it is not having as much impact, then you don't
want to use the tool any more," he said. "Or, as you approach
those goals and things get better, then you reduce the amount of
Fisher also said he does not believe that any of his
colleagues are advocating for no limits to the Fed's bond-buying
"No one is arguing it, to my knowledge," even if inflation
stays below the Fed's 2-percent inflation goal, he said.
The bond purchases are building up a balance sheet that
eventually will need to be trimmed, he warned, adding that it is
important that whatever the Fed does today does not tie the
hands of a future Fed chairman.
Fed Chairman Ben Bernanke's term ends next year and he is
widely expected not to seek reappointment.