Richard Fisher, president of the Dallas Federal Reserve Bank, has reportedly said that the U.S. economy is grim and would follow a lower growth path until confidence returns. Speaking at an event in Tokyo hosted by the Japan Center for Economic Research, the Institute for International Monetary Affairs and the Japanese Bankers Association, Fisher forecast that the unemployment rate, which touched 8.5% in March, would rise to 10% by the end of the year.

Fisher said the economy might have contracted 6.3% in the first quarter, similar to the shrink in the last quarter of 2008. He feels monetary policy alone is incapable of resuscitating the economy, and that fiscal stimulus is necessary to trigger growth.

I consider our track record and our adaptability the stuff of an eventual recovery that will take my country to new levels of prosperity. I am confident that the innovative policies being pursued by the Federal Reserve will facilitate and, indeed, expedite the recovery process, Fisher was quoted as saying.

Reports added that Fisher said the Federal Reserve was duty bound to apply every tool we can to clean up the mess that our financial system has become and get back on the track of sustainable economic growth with price stability.

Fisher also felt that inflation is unlikely to present a serious threat for the time being. As per reports, he said currencies such as the euro were facing more problems than the U.S. dollar and that dollar-denominated assets would remain relatively attractive.

Fisher is not a member of the Federal Reserve's rate-setting Federal Open Market Committee this year.

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