Federal Reserve Bank of Dallas president Richard Fisher said Friday that it won't be appropriate to consider tightening monetary policy until the Fed's accommodative monetary policies actually have a stimulative effect on the economy.
Fisher, a voting member of the Fed's policymaking Federal Open Market Committee, reiterated that he thinks the Fed has pumped plenty of "liquidity" into the system to try to spur growth and job creation and was dubious about the efficacy of easing even further.
But in an appearance on Bloomberg TV he seemed in no hurry to begin the process of exiting from zero interest rates or an expansionary reserves policy.
Fisher said the Fed will continue to reinvest principal payments on securities in its portfolio to prevent reserves from shrinking and will keep its pledge to hold the federal funds rate at "exceptionally low" levels for "an extended period" for "as long as is appropriate."
Given that the economy is "weak," the avowedly "hawkish" Fisher offered no disagreement with Fed chairman Ben Bernanke's suggestion following Wednesday's FOMC meeting that the duration of the "extended period" has lengthened in wake of a downgrade in the FOMC's gross domestic product and job projections.
Like Bernanke, he foreclosed no policy options, saying that the Fed will have to make judgments about the best way to proceed as the data comes in, though he made clear he would be disinclined to support further easing.
The $600 billion second round of quantitative easing "ends at the end of June; that much is clear," he said. "We will also continue to reinvest roll-offs … for as long as is appropriate."
And the "extended period" language in the FOMC policy statement "will stay in place for as long as is appropriate," Fisher said.