May 19, 2014 / 5:00 PM / 4 years ago

Fed won't allow inflation upon exit -Williams

DALLAS, May 19 (Reuters) - The Federal Reserve is actively testing tools to raise rates when needed, and has a plan to exit its extraordinarily easy policies that will allow it to do so without sparking inflation, a top Fed official said on Monday.

“We are ready to implement it as appropriate; we won’t allow inflation to take hold,” San Francisco Fed President John Williams said at a monetary policy conference at the George W. Presidential Center.

Low inflation at this point is a bigger threat than high inflation, he added.

Dallas Fed President Richard Fisher, speaking on the same panel, was a bit less sanguine, calling the trillions of dollars of reserves at U.S. banks created by the Fed’s super-easy monetary policies “inflationary tinder” the Fed needs to prevent from flaring into actual inflation.

Reporting by Ann Saphir; Editing by Meredith Mazzilli

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