The U.S. economic recovery is slowing, but the Federal Reserve doesn't need to do more to help it along, Dallas Fed President Richard Fisher said on Wednesday.
The Fed, the U.S. central bank, has kept short-term interest rates at near zero since December 2008, and has bought more than $1 trillion in mortgage-backed securities to blunt the worst downturn since the Great Depression.
To get banks back to lending and companies back to spending requires more regulatory certainty, not cheaper money, Fisher said in an interview on business news channel CNBC.
"People are uncertain — they are hoarding cash, they are holding back," Fisher said, citing the complexity of the healthcare bill as a factor in making it difficult for corporations to project future costs.
"This is nothing to do with monetary policy — we have been as accommodative as possible," he said.
While the recovery has slowed, it is unlikely the U.S. will fall back into recession, he said.
The Fed doesn't need to buy more assets, and should be careful about "going too far," he said, although not because of concerns over inflation, which he said isn't an issue.
Buying more assets "could do damage by damaging our credibility," he said.
"There is plenty of liquidity in the system," he said. "It will be utilized only if there's confidence in the future."
Fisher compared a football game to the state of the economy, which he said isn't at the start of a double-dip recession. It will undergo sluggish growth in second half of this year, Fisher told CNBC.
A double-dip recession is characterized by most experts as a period of growth and followed by a further decline in the economy.
“We were deep in the end zone [recession],” said Fisher. “What got us out [of the economic turmoil] were some spectacular runs by Mr. Inventory Adjustment, and also investment in software and equipment."
He said such investment has run its course and "we’re running up the middle in a ground game, basic block and tackling.”
He also said that some banks are too big for the overall health of the financial system.
Concentrating too much power in big banks is "not healthy," Fisher told CNBC.
Fisher has consistently called for the breakup of large banks to make the financial system safer.
Earlier this week, Fisher said the timing of monetary tightening will depend on conditions in the U.S. economy, which will slow in the latter half of this year, Japan's Nikkei newspaper reported.
Weakness in private consumption may hurt growth and politicians might call for an expansion of monetary easing, although there is little more the Fed can do, Fisher said in an interview with the economic daily.
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