Federal Reserve Bank of Dallas President Richard Fisher said the U.S. central bank has “done its job” to provide liquidity when it was needed and that the economy now needs Congress to indicate a clearer plan for taxes and spending.
“We have had generations of congressmen, congresswomen and senators who have not done their job,” Fisher said in a speech in Choudrant, Louisiana today. Businesses “are not going to hire until we have an outlook for what it’s going to take to run their business.”
Fisher has repeatedly argued that more stimulus from the Fed can’t solve the uncertainty over fiscal policy that’s holding back the U.S. recovery, calling the prospect of another round of asset purchases “a fantasy of Wall Street.” The policy-setting Federal Open Market Committee this month noted improvements in the labor market while still warning of “significant downside risks.”
“On balance, the data indicate improving growth prospects for 2012,” Fisher said at a community forum sponsored by the Dallas Fed.
The district bank chief added that the central bank had “let its guard down” in the years leading up to the 2008 financial crisis by maintaining easy policy for too long.
“Keeping interest rates too low too long led to speculative activity because people reach for yield,” he said in response to a question from the audience. “The Federal Reserve let its guard down and became too complacent.”
Fisher, who isn’t a voting member of the FOMC this year, dissented twice last year against moves to push down long-term rates and to keep the benchmark borrowing cost near zero until at least mid-2013.
“I am personally not arguing at the table or publicly that we should be tightening right now,” Fisher told reporters after his speech today. “Before you tighten you have to stop accommodating and I don’t believe we need further accommodation.”
The district bank chief said higher gasoline prices are being offset by declines in prices for natural gas and other commodities.
“We haven’t seen it really pinch yet in terms of retail sales or final demand,” Fisher said of gasoline prices. “You reach a point where shoppers consolidate their trips to the Wal- Mart or mall or whatever and I don’t hear retailers raising the alarm yet like it did last time gas was $4.’
The average price for unleaded gasoline at the pump climbed to almost $3.90 a gallon yesterday according to data from AAA, the country’s largest automotive group.
Fisher, 63, has been president of the Dallas Fed since 2005. His district includes Texas, northern Louisiana and southern New Mexico.
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