Richmond Federal Reserve President Jeffrey Lacker said on Tuesday that he favors a narrower, more restrained role for the U.S. central bank.

Lacker said the Fed's ambitious use of balance sheet as a way to channel credit to particular economic sectors threatens to entangle the Fed in politics and puts the bank's independence at risk.

"Moreover, the use of central bank credit to rescue creditors boosts moral hazard and encourages vulnerability to financial shock," Lacker said at the annual Credit Markets Symposium held at the Fed's Charlotte branch.

Lacker did not comment on the outlook for the U.S. economy or monetary policy in his opening remarks.