WASHINGTON (MNI) – Dallas Federal Reserve Bank President Richard
Fisher Thursday said there is a better “tone” in the U.S. economy, and
that while job creation remains sluggish, he does not see a need for
further quantitative easing by the central bank.

In an interview on CNBC, Fisher took issue with the assessment of
the economy by the Fed’s policymaking Federal Open Market Committee
after its January meeting.

“At the last meeting … I warned that I thought the statement was
talking down the economy,” he said. Fisher was a voter on the FOMC last
year and will not be again until 2014.

“The tone is a lot better,” Fisher argued, although he
acknowledged, “It’s not brilliant, we don’t have enough new hiring
taking place.”

Still, the economy is definitely moving in the right direction and
Fisher said his personal feeling is that “things are better than the
numbers might suggest or are at least moving in the right direction.”

The U.S. Labor Department Thursday reported that initial claims for
unemployment benefits remained was unchanged at 351,000 in the February
18 employment survey week. Continuing claims fell by 52,000 to 3.392
million in the February 11 week.

Fisher stressed caution, however, given expectations for stronger
growth in 2011 that then turned out to be too optimistic.

“We don’t want a false impression, we’ve had false starts,” he
said. “I think our job at the Federal Reserve, the whole committee, is
just to be cautious and to make sure that we do the right thing.”

The outspoken Fisher, however, remained steadfast in his opposition
to a third round of quantitative easing by the Fed to aid the recovery.

“Things are getting better not worse, I don’t see any need —
personally — for QE3 here,” he said. “Our job is not to prop up the
Street.”

Many predict the Fed could seek to help the economy by making
additional purchases of mortgage-backed securities, so as to drive
mortgage rates down even further and spark the housing market.

“We are seeing the housing market regain its footing,” Fisher
countered, and the real need is to clear off the inventory piling up due
to the foreclosure mess.

“Personally, I’m not a big supporter of the concept (of more MBS
buys),” he said.

But despite being against further easing, Fisher said it is
important that the Fed has “bullets in our holster in case things go
haywire, and we’ll use those tools if necessary.”

For now, “it appears that the economy is doing much better,” he
reiterated, although too many Americans remain out of work.

In its statement following the January meeting, the FOMC said
economic conditions will likely require interest rates to remain at very
low levels until at least late-2014.

Fisher said this should be interpreted as meaning that “rates are
going to stay low for as long as it is practicable.”

“The intention is to keep things as they are until we see
improvement in the economy.”

Fisher said he is uncomfortable with time-contingent monetary
policy.

He stressed again that the intention of the FOMC is to “make sure
that we adjust to the real economy and as new data comes in — and more
anecdotal evidence on top of that is confirming what the data says —
then we will adjust. The question is when.”

The Fed will not execute its exit strategy until the right time,
Fisher said.

Fisher also declared his support for new regulations targeting the
risk posed by large financial institutions, particularly the Volcker
Rule banning proprietary trading.

“I’m a big, strong supporter I should say of the Volcker Rule,”
Fisher said, adding that he believes it would be best to downsize the
five largest U.S. banks.

** Market News International Washington Bureau: 202-371-2121 **

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