Future voting members of the Fed’s policy setting committee waved off concerns regarding a declining dollar on Thursday, Nov. 19, suggesting that unless the decline becomes volatile or otherwise erratic, concerns about an inflationary impulse are unwarranted.

In commentary that seems to suggest the dollar’s decline may be a counterbalance to a historically undervalued renminbi (RMB). Dallas Fed President Richard Fisher told Market News International (MNSI) that the declining dollar value was simply one factor out of many the Fed used as an analytical input for its policy setting model.

Fisher told reporters that “a gradually depreciating dollar” would not necessarily add an “enormous inflation impulse”, and that the Fed’s answer to concerns over a weaker dollar was to pay attention to the dollar’s activity. Fisher also mentioned that there are “trade-offs” to be made between the strength of the dollar and deliberately low interest rates existing over a protracted interval such as this, due to Fed intervention.

The dollar, which is at a 15-month low, having fallen 7% this year, has become a funding mechanism in emerging markets where currency ratios permit speculators to profit on the fluctuations.

The Organization for Economic Cooperation and Development (OECD) stated today that it more than doubled its growth projection for 2010, hitting 1.9%, compared to 0.7% forecast for June. OECD is comprised of 30 member countries including the U.S., Japan, Germany and the United Kingdom.

Charles Plosser President of the Philadelphia Fed echoed his colleague’s sentiment to reporters after a conference in Singapore, saying that all that the dollar has done at this point is go back to where it was “before the panic set in”. Plosser said that he didn’t view this activity by the dollar as “anything particularly of concern”.

Fed Chair Ben Bernanke commented directly on the dollar earlier this week on Monday, saying that the Fed’s focus on its dual mandate of job growth and price stability would create a “strong” dollar.

An outlook of lower U.S. rates for the foreseeable future has sent a lot of capital abroad in search of higher returns, and so far Brazil and Taiwan have taken steps to curb capital inflows. Asia, which was the last to see the effects of the crisis and the first to show recovery, has drawn in most of the capital, generating concerns that the resulting asset bubble will force tighter capital controls from policy makers.

Plosser scoffed at the Asian asset bubble, asserting that movements of capital were consistent with the underlying market fundamentals and explained that the prospects for economic growth were “stronger in Asia than in the U.S., and you would expect some of those flows”.

Both Plosser and Fisher clearly highlighted deficiencies within the U.S. economy while assenting to an ongoing recovery. Fisher projected growth falling short of 3% in 2010 coupled with high unemployment, saying “”This is not a very jobful recovery”. Plosser acknowledged the commercial real estate bubble without explicitly defining it, instead saying that falling prices could threaten small and medium-sized U.S. banks.