ALBUQUERQUE, N.M. Oct 21 The U.S. Federal
Reserve risks creating new problems if it floods the economy
with cash to try to reduce the unemployment rate too quickly,
Kansas City Federal Reserve Bank President Thomas Hoenig said
Telling a group of business leaders that he is very unhappy
with the 9.6 percent jobless rate, he also warned against
seeking a quick fix.
"If you try and bring it down too rapidly you are in danger
of creating the next problem," he said.
Most analysts expect the Fed to ease policy further,
pumping more cash into the economy with new Treasury purchases
as early as next month.
But a new round of quantitative easing, or QE2 as it has
come to be known, may not be effective in spurring demand,
could spark higher inflation than intended, and could hurt the
Fed's credibility, he said.
(Reporting by Ann Saphir; editing by Kazunori Takada)