The economy is in much better shape and does not need further help from the central bank, a top Federal Reserve official known for his hawkish policy views said on Thursday.
Although growth is slower than we would like, Dallas Fed President Richard Fisher told Fox Business Network, it's gaining momentum.
We will not support further quantitative easing under these circumstances because there's a lot of money lying on the sidelines, lying fallow, he said according to a transcript provided by the network. We don't need any more monetary morphine.
The Fed has kept benchmark interest rates near zero since December 2008 and has bought $2.3 trillion in bonds to stimulate growth, a program known as quantitative easing.
At its March policy meeting, the Fed nodded to recent economic improvement but reiterated concerns about high unemployment and its expectation that subpar economic performance will require keeping rates near zero through late 2014.
Among analysts and investors, however, expanding manufacturing and improving labor markets in recent months have lifted hopes for recovery. In February unemployment was at a three-year low of 8.3 percent. The housing sector also appears poised to improve, with permits for homebuilding this week approaching a 3-1/2-year high.
Traders have reacted by betting the Fed will start raising rates as soon as July 2013.
Fisher, who is not a voter on the Fed's policy-setting panel this year, said he is not worried about inflation, which he expects to come down to around the Fed's 2 percent target.
The real problem in our country is job creation and prosperity, he said. And we need to get better fiscal policy to complement what we at the Fed have done, because it's not working as effectively as it should.
With rates near zero, pushing borrowing costs lower simply will not create more jobs, Fisher said.
I don't see what more would do, Fisher said. And I especially could not justify it if the economy continues to improve along the path which has been indicated recently.
(Reporting by Ann Saphir; Editing by James Dalgleish)