The unwinding of accommodation will determine the long-term inflation impact of QE3, Federal Reserve Bank of Dallas President Richard Fisher said Wednesday.
With neither inflation nor deflation expected, it is unclear how "the massive" quantitative easing will play out in terms of long-term inflation.
Noting he opposed this easing, Fisher told a gathering at University of Texas at El Paso, "Those aftereffects will depend on how artful the committee will be in unwinding that accommodation on a timely basis," according to prepared text released by the Fed.
Inflation, he noted is currently less than the Fed's 2% target, while "employment, however, is not at a comfortable level."
"But it is not yet clear that we will achieve a justifiable bang for the trillions of bucks the Fed has flooded the economy with," he said. "Only time will tell if the efficacy of quantitative easing we have undertaken was justifiable in regard to job creation and delivering on the second component of our dual mandate."
