CHICAGO (Reuters) - The U.S. economic recovery is slowing, but the Federal Reserve does not need to do more to help it along, Dallas Fed President Richard Fisher said on Wednesday.
The Fed, the U.S. central bank, has kept short-term interest rates at near zero since December 2008, and has bought more than $1 trillion in mortgage-backed securities to blunt the worst downturn since the Great Depression.
To get banks back to lending and companies back to spending requires more regulatory certainty, not cheaper money, Fisher said in an interview on business news channel CNBC.
“People are uncertain — they are hoarding cash, they are holding back,” Fisher said, citing the complexity of the healthcare bill as a factor in making it difficult for corporations to project future costs.
“This is nothing to do with monetary policy — we have been as accommodative as possible,” he said.
While the recovery has slowed, it is unlikely the U.S. will fall back into recession, he said.
The Fed does not need to buy more assets, and should be careful about “going too far,” he said, although not because of concerns over inflation, which he said is not an issue.
Buying more assets “could do damage by damaging our credibility,” he said.
“There is plenty of liquidity in the system,” he said. “It will be utilized only if there’s confidence in the future.”
Reporting by Ann Saphir, Editing by Theodore d'Afflisio