Two top Federal Reserve officials said on Tuesday they expect the central bank's $600 billion bond purchase program to run its full course, while a third said the central bank should seriously consider scaling it back.
All three suggested the Fed would face a high bar to increasing the program as the recovery gathers pace.
Dennis Lockhart, president of the Atlanta Fed, said based on his current forecast for moderate growth, more bond buying would not be needed after June, while Dallas Fed President Richard Fisher said he would likely dissent if further easing were on the table.
The Fed launched the controversial second round of quantitative easing in November to support a fragile economy. At its January meeting, voters on its policy-setting committee unanimously agreed that with unemployment still high, the program was warranted.
Both Fisher and Lockhart said they expect the program to run its full course, while Richmond Federal Reserve Bank President Jeffrey Lacker said the central bank should seriously consider scaling back the program given a stronger recovery.
The central bank has stressed after its two most recent meetings that the recovery is not strong enough to make a significant dent in an unemployment rate that stood at 9 percent in January.
The debate over whether to extend bond buying will likely come front and center as soon as the next meeting of the Fed's policy-setting committee on March 16. The issue should dominate the two subsequent meetings before the program is due to be complete at the end of June.
Given current economic circumstances and financial conditions, it is hard for me to envision a scenario where I would not use my voting position this year to formally dissent should the Open Market Committee recommend another tranche of monetary accommodation, Fisher, a known inflation hawk, told a business group in Dallas.
Lacker pointed to stronger growth and a brighter jobs picture as a reason the Fed may have to rethink its policy, but added he was not advocating stopping the purchases at this time.
An array of forward-looking indicators of employment trends point to continued labor market improvement, Lacker, also an inflation hawk, told a business gathering at the University of Delaware.
Lockhart, seen as a centrist, said that it is unlikely that jobs growth will be strong enough in 2011 to generate quick improvement in the employment picture.
Lockhart said inflation was still below his comfort level and that while increases in prices of commodities were fueling some inflation anxiety among the general public, they did not signal incipient inflation, he told the Calhoun County, Alabama, Chamber of Commerce.
He said he expects core inflation to rise gradually, to within the Fed's informal 2 percent target range, by 2013. While headline inflation has picked up in the United States, core inflation has held near a five-decade low.
The Fed has come under criticism from some analysts who argue its easy money policy is flooding the global economy with money and helping to drive prices for food and other commodities higher, contributing to instability overseas.
Lockhart and Lacker both called the criticism unfair.
Regional Fed presidents rotate into voting seats on the Fed's policy-setting committee. Fisher has a vote this year, but Lockhart and Lacker do not.
(Additional reporting by Ann Saphir in Dallas, Texas and Pedro da Costa in Newark, Delaware; Editing by Dan Grebler)