“BERLIN (Reuters) – Dallas Fed President Richard Fisher, a top Federal Reserve official, said on Tuesday the U.S. central bank could get into trouble if it doesn’t set a limit on the amount of assets it is willing to buy.
But Fisher, a critic of easy Fed policy, also said his main concern now was unemployment, not inflation.
He said another option the Fed might consider to signal its aims to markets was a target for unemployment, although this would be difficult because monetary policy alone was not responsible for creating jobs. Fiscal policy was also key.
Fisher kicked off his speech at a conference in Berlin with a reference to German policies in the 1920s that led to hyperinflation, saying that while inflation was not his main concern now, unlimited quantitative easing was risky.
“You cannot expand without limits without horrific consequences,” he told reporters on the sidelines of the conference organized by the Levy Economics Institute. “There is no infinity in monetary policy, we know that from the German experience.”
The Fed announced a third, open-ended round of asset purchases in September that it says will continue until there is a substantial turnaround in the labor market.
A self-described anti-inflation hawk, Fisher said the Fed should announce “sooner rather than later” limits on the amount of assets it would purchase, preferably in December.”
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