By Brai Odion-Esene

WASHINGTON (MNI) – Dallas Federal Reserve Bank President Richard
Fisher Tuesday questioned calls for the Fed to inject additional
monetary stimulus into the U.S. economy, arguing that it would do little
to address the problems caused by the turmoil in Europe, slow growth in
emerging economies and the fiscal as well as regulatory uncertainty
here at home.

In remarks on the limits of powers of central banks prepared for
St. Andrews University in Scotland, the outspoken Fisher described the
calls for further monetary accommodation as the “hue and cry of
financial markets.”

“Interest rates are at record lows,” he argued, and “trillions of
dollars are sitting on the sidelines, not being used for job creation.”

The Fed’s policymaking Federal Open Market Committee meets June
19-20, and Fisher said that “during the next few weeks as I contemplate
the future course of monetary policy, I will be asking myself what good
would it do to buy more mortgage-backed securities or more Treasuries
when we have so much money sitting on the sidelines and yet have no
sense of direction for the future of the federal government’s tax and
spending policy.”

Fisher will not be a voter on the FOMC until 2014.

He added that with the uncertainty over the future of President
Obama’s Affordable Care Act, businesses are unable to budget personnel
costs until that case is decided.

“If job-creating businesses have no idea what their taxes will be,
are clueless about how federal spending will impact their customers or
their own businesses and cannot budget personnel costs — all on top of
concerns about the risk to final demand posed by the imbroglio in Europe
and slowing growth in emerging-market countries — how could additional
monetary policy be stimulative?” Fisher asked.

He argued that further accommodation by the Fed “would represent a
form of piling on the already enormous uncertainty and angst that
businesses face with our reckless fiscal policy.”

“To me, that would be the road to perdition for the Federal
Reserve,” Fisher warned.

He noted there is already a lingering fear in the marketplace that
the Fed has expanded its balance sheet to its stretching point and that
an exit strategy, “though articulated, remains theoretical and untested
in practice.”

“And there is a growing sense that we are unwittingly, or worse,
deliberately, monetizing the wayward ways of Congress,” he added.

Going down the path of additional monetary stimulus, Fisher warned,
would not just mean the Fed would be pushing on a string, but the
central bank could also be painted “as an accomplice to the mischief
that has become synonymous with Washington.”

** MNI Washington Bureau: 202-371-2121 **

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