WASHINGTON (MNI) – The U.S. economy is experiencing an increase in
momentum, but it is still too early to begin talk of tightening monetary
policy, Dallas Federal Reserve Bank President Richard Fisher said
Monday.

In an interview on CNBC, Fisher also said while the Fed is not
ready to tighten, he is not willing to support further accommodation
either through greater quantitative easing or through further
acceleration of Operation Twist, as they are not “practicable” options
at this point.

“The easy part for those that just rode on the jet stream of
Federal Reserve accommodation is over” he warned. Fisher is not an
FOMC voter this year.

“My view is that the economy is improving,” Fisher said. And while
it is not “overwhelming robust,” it is positive, moving in the right
direction and gaining momentum, he added.

Still, “I think it’s a little bit premature to talk about
tightening,” he said. “That is very much dependent on how the economy
evolves and right now it’s evolving in the right direction.”

“But the question is will we go — as the Chairman has said — from
job creation to growth and final demand. I think we are proceeding along
that path but we have a ways to go,” he said.

So while the economy is not in a “sweet spot,” there has been a
shift from a negativity in the marketplace, and fears of a double-dip
recession, Fisher said.

As for the FOMC’s expectation that rates will need to remain low
through 2014, Fisher said at the right time the date will have to be
adjusted.

“That may be a way for us to express the fact that we have more
confidence in the economy, but it will depend on what the data shows and
what we are feeling, what we are seeing, what we are smelling on the
street,” he said.

The pace of economic activity is picking up, and job creation is
moving forward, “although we would like to see it move faster,” Fisher
added.

In addition, there are no signs of “dramatic” inflationary
pressures despite high gasoline prices.

“We are in a much better position right now,” Fisher said. “The
economy is extremely liquid, there’s a lot of liquidity out there.”

It is a great time for American businesses, he continued, adding
that — with just a little more certainty about future fiscal policy —
they are “poised to take off.”

And despite keeping monetary policy accommodative to support the
recovery, Fisher also sought to underline the Fed’s continued
commitment to its other mandate, price stability.

He said the adoption of an explicit annual inflation target of 2%
after the January meeting of the Fed’s policymaking Federal Open Market
Committee should make it clear the Fed will not “violate” its long-term
inflation objective.

“I hope that provides some reassurance,” he said.

Regarding now fading expectations for additional stimulus from the
Fed, Fisher repeated than barring another crisis, or “significant
slippage” in the economy, he does not see the need for more action.

“I think we ought to sit, wait, watch,” he said. “Our job is to do
what’s right for the real economy, and in fact be looking — if the
economy continues to improve — as to how we are going to exit from the
position we are currently in.”

Fisher also repeated his call to tackle the issue of too-big-to
fail banks, saying “the time is now,” with the economy getting stronger.

** MNI Washington Bureau: 202-371-2121 **

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