By Ann Saphir
NORMAN, Okla., April 10 Chiefs of U.S. companies
big and small are worried the Federal Reserve's bond-buying
programs could lead to uncontrolled inflation, a top Fed
official known for his opposition to further monetary stimulus
said on Tuesday.
"To a person that I speak to, I am pleaded with, 'please no
more liquidity'," Dallas Federal Reserve Bank President Richard
Fisher told students at the University of Oklahoma's Price
College of Business. There is "real concern that with our
expanded balance sheet that we are just a little bit of an ember
in what could become an inflationary fire."
Speaking with reporters afterward, Fisher said he did not
necessarily share the view of his business contacts on
inflation, projecting that it will settle near the Fed's 2
Still, he said, he has been surprised by what appears to be
a deepening fear.
"I am beginning to hear that there are concerns particularly
in the small business community about cost push pressures,"
Fisher said. "They don't have the pricing power that they would
like but they are feeling the squeeze on the cost side."
Fed officials track inflation expectations closely, as they
can feed into actual inflation if businesses begin pricing their
goods with those expectations in mind.
The Fed has kept short-term interest rates near zero since
December 2008 and has bought $2.3 trillion in Treasuries and
mortgage-backed securities to push borrowing costs down even
But the recovery from the worst downturn since the Great
Depression - now well into its third year -- has been slow, and
the Fed last month reiterated its plan to keep benchmark rates
near zero through late 2014 to help nurse it along.
Most major Wall Street firms expect anemic growth in U.S.
jobs and a struggling economic recovery to force the Fed to
launch a third round of quantitative easing, or QE3, a Reuters
poll found on Monday.
A government report Friday showing U.S. businesses added far
fewer jobs in March than expected gave support to that
Fisher downplayed the report, saying it does not change his
outlook on the economy, from which he expects continued growth.
"You don't make decisions based on one data point," he said.
Fisher said he talks to business contacts at companies
including Wal-Mart, which he did not mention by name but
described as a company with more than a million employees
headquartered in Arkansas.
Fisher, who is not a voter this year on the Fed's
policy-setting panel, has long been opposed to the Fed's
zero-rate interest policy, and has said he will not support any
Fisher said he believes that what the economy needs most is
better clarity on the future of taxes and regulation.