A top Federal Reserve official said on the Thursday the U.S. economy should grow at a modest pace for the next several years, but issued a harsh criticism of the U.S. central bank's just-concluded bond buying program.
The outlook for the U.S. economy is that we will continue to grow at a modest pace of somewhere between 2.5 (percent), on a good quarter, 3 percent, at least in terms of next year and the year beyond, said Kansas City Fed President Thomas Hoenig.
Hoenig is one of the most outspoken critics of the Federal Reserve's exceptionally easy money policies. He is not a voter on the Fed's policy-setting panel.
The Kansas City Fed chief has persistently objected to the extent of the Fed's aggressive steps to support a weak recovery from a sharp recession that ended in June 2009. When he was a voter on the Fed's policy-setting Federal Open Market Committee in 2010, he dissented at every rate-setting meeting on the grounds that policy should be tighter.
He renewed his sharp criticism of Fed policies on Tuesday, calling the Fed's most recent bond buying initiative to stimulate economic growth -- called QE2 because it was the second round of quantitative easing -- a back-handed funding of U.S. borrowing.
QE2 was a monetization of $600 billion of debt, Hoenig said.
Top officials at the Fed deny their purchases of Treasuries were a deliberate monetization the U.S. debt. Chairman Ben Bernanke has said Fed purchases of Treasuries are aimed at lowering longer term interest rates and are the central bank's most effective tool for stimulating growth when short-term rates are near zero.
(Reporting by Christine Stebbins, writing by Mark Felsenthal; Editing by Bernard Orr)