–Economic Conditions Should Determine How Soon After QE2 End To Hike
–Fed Aware That Headline Inflation Numbers Have Gotten ‘A Little Stout’

By Brai Odion-Esene

LAS CRUCES, New Mexico (MNI) – Dallas Federal Reserve Bank
President Richard Fisher Wednesday said having argued against, and lost,
the debate over whether to keep monetary conditions accommodative, he
would not dissent against the Fed’s Federal Open Market Committee going
forward unless it was on something “truly, dramatically egregious.”

Speaking to reporters after a speech at New Mexico State
University’s Domenici Institute Forum in Las Cruces, Fisher was asked
why he has yet to dissent at any FOMC meeting so far this year despite
his outspoken opposition to the Fed’s highly accommodative policies —
particularly the large scale asset purchases.

Fisher said given that he lost the argument leading up to the
implementation of QE2, he is willing to vote along with the majority,
for now.

“The majority decided for it. You make a commitment as a central
bank and I think you keep your commitment,” he said, “It’s majority
rule.”

“Unless I felt that something was truly, dramatically egregious
going forward, I think once you’ve made your best effort — once the
committee has made a decision — then that’s the decision of the
committee and you keep your word,” Fisher said.

Pressed on if he would be prepared to support a rate hike before
the end of the year, Fisher would only reiterate that, under the right
circumstances, he expects to be one of those within the Federal Reserve
“arguing for normalization of monetary policy when it is the right time
to do so.”

Fisher said economic circumstances should dictate how soon after
the end of QE2 should monetary policy tightening begin.

In response to a question by Market News International, Fisher
agreed that there is a more concerted effort by Fed officials to show
they are aware of rising inflation concerns.

“We know that that mandate is precious,” he said. “We are serious
about it.”

If there is any sense that the Fed is not taking inflation
seriously expectations can lead to creating inflation itself, Fisher
warned, noting that some of the markets have indicated “a slight
increase” in concerns.

The Fed is aware that headline inflation numbers have gotten “a
little stout,” he said, and is monitoring the developments of the
underlying inflationary trend.

“We’ll just have to carefully monitor this as we go through time,”
Fisher said.

Fisher did not comment on housing market conditions during his
prepared remarks, but told reporters that the recovery in that sector
will be a slow process.

“It’s going to be a slow crawl,” he said.

However, given the smaller role housing now plays in U.S. economic
growth, the slow housing recovery “weighs on the recovery less,” Fisher
said.

** Market News International **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,MT$$$$]