Dec 17 A top U.S. Federal Reserve policymaker on
Monday redoubled his opposition to the U.S. central bank's
accommodative policies, warning that its latest policy steps
"test the limits" of the Fed's hard-won credibility on
Repeating arguments he has made in the past, Richmond Fed
President Jeffrey Lacker said the central bank's growing stable
of assets makes it much more vulnerable to "small errors."
The Fed is "straining to provide as much stimulus as
possible without endangering our price-stability credibility,"
he said on CNBC television. "My worry and the reason I dissented
... is that we seem to be willing to test the limits of that
The Fed last week stepped up its bond-buying plan, meant to
spur investment and economic growth. For the first time, it also
pledged to keep interest rates near zero while unemployment
remained above 6.5 percent, provided inflation remains contained
below 2.5 percent. This replaced a previous commitment to hold
rates down until at least mid-2015.
Lacker, who has dissented on every Fed policy decision this
year, said he backed dumping the calendar-based policy. But he
argued the 6.5 percent threshold is "risky" because the
unemployment rate is not a fulsome measure of the labor market,
and because the Fed cannot directly control the jobless rate.
"The risk is that people become fixated on it, and it
becomes an interference in our communications," he said, adding
it could create tension with the Fed's mandate to keep prices
Lacker added he expects the United States to reach 6.5
percent unemployment in about three years. The jobless rate was
7.7 percent last month, down from previous levels but still