WASHINGTON - The U.S. economy is experiencing an increase in momentum, but it is still too early to begin talk of tightening monetary policy, Dallas Federal Reserve Bank President Richard Fisher said Monday.
In an interview on CNBC, Fisher also said while the Fed is not ready to tighten, he is not willing to support further accommodation either through greater quantitative easing or through further acceleration of Operation Twist, as they are not "practicable" options at this point.
"The easy part for those that just rode on the jet stream of Federal Reserve accommodation is over" he warned. Fisher is not an FOMC voter this year.
"My view is that the economy is improving," Fisher said. And while it is not "overwhelming robust," it is positive, moving in the right direction and gaining momentum, he added.
Still, "I think it's a little bit premature to talk about tightening," he said. "That is very much dependent on how the economy evolves and right now it's evolving in the right direction."
"But the question is will we go -- as the Chairman has said -- from job creation to growth and final demand. I think we are proceeding along that path but we have a ways to go," he said.
So while the economy is not in a "sweet spot," there has been a shift from a negativity in the marketplace, and fears of a double-dip recession, Fisher said.
As for the FOMC's expectation that rates will need to remain low through 2014, Fisher said at the right time the date will have to be adjusted.
"That may be a way for us to express the fact that we have more confidence in the economy, but it will depend on what the data shows and what we are feeling, what we are seeing, what we are smelling on the street," he said.
The pace of economic activity is picking up, and job creation is moving forward, "although we would like to see it move faster," Fisher added.
In addition, there are no signs of "dramatic" inflationary pressures despite high gasoline prices.
"We are in a much better position right now," Fisher said. "The economy is extremely liquid, there's a lot of liquidity out there."
It is a great time for American businesses, he continued, adding that -- with just a little more certainty about future fiscal policy -- they are "poised to take off."
And despite keeping monetary policy accommodative to support the recovery, Fisher also sought to underline the Fed's continued commitment to its other mandate, price stability.
He said the adoption of an explicit annual inflation target of 2% after the January meeting of the Fed's policymaking Federal Open Market Committee should make it clear the Fed will not "violate" its long-term inflation objective.
"I hope that provides some reassurance," he said.
Regarding now fading expectations for additional stimulus from the Fed, Fisher repeated than barring another crisis, or "significant slippage" in the economy, he does not see the need for more action.
"I think we ought to sit, wait, watch," he said. "Our job is to do what's right for the real economy, and in fact be looking -- if the economy continues to improve -- as to how we are going to exit from the position we are currently in."
Fisher also repeated his call to tackle the issue of too-big-to fail banks, saying "the time is now," with the economy getting stronger.
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