Tags: Fisher | Fed | Cut | Rates

Fisher: Further Fed Steps to Cut Rates Won't Work

Tuesday, 18 Oct 2011 02:47 PM

He's an inflation "hawk" who isn't worried about inflation, a former political candidate appalled by politics, a dissident who views himself as part of the team.

An idiosyncratic figure, Richard Fisher has drawn attention lately as one of three members of the Federal Reserve's policymaking committee who have lined up against Chairman Ben Bernanke's steps to try to stimulate the economy.

The three are a minority — Bernanke's side has prevailed with seven votes — but they represent the highest level of dissent at the Fed in nearly two decades.
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In a wide-ranging interview with The Associated Press, Fisher said his objections aren't with Bernanke, whom he describes as "an unbelievably decent human being."

Rather, he argues that further efforts to lower interest rates won't do any good, will hurt people who need interest income and could threaten pension funds. And he says the Fed's actions give Congress an excuse to delay politically painful agreements on taxes and spending.

"The more we offer accommodative monetary policy," said Fisher, president of the Federal Reserve Bank of Dallas, "the less incentive they have to pull their socks up and do what's right for the American people."

The Fed has already cut short-term interest rates to zero and bought $2.3 trillion in Treasury and mortgage securities to try to force down long-term rates to invigorate growth.

Businesses and consumers are paralyzed by uncertainty, Fisher says, because Republicans and Democrats can't agree on taxes, spending or regulations.

Fisher shrugs off recent political attacks on the Fed's policy decisions. On the eve of its policy meeting last month, Republican leaders urged the Fed against acting further to try to stimulate the economy.

"None of us paid attention to it," Fisher says.

Fisher, 62, has been president of the Dallas Fed since April 2005. Previously, he worked on Wall Street and at Henry Kissinger's consulting firm, ran a wealth-management company and served at the Treasury and as a deputy to the U.S. Trade Representative.

In 1994, he ran as a Democrat for a U.S. Senate seat from Texas. He was trounced.

"I was terrible at it," he says. "I'm the only (Fed committee) member that was stupid enough to run for office."

At the committee's August meeting, Fisher was among three members who opposed a plan to keep short-term rates near zero until mid-2013 unless the economy improves. Last month, the same three voted against a plan to shuffle the Fed's investment portfolio to try to lower long-term rates.

Fisher says he sometimes worries about how history — and his children — will judge how policymakers handled the gravest economic and financial problems since the 1930s.

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He's an inflation hawk who isn't worried about inflation, a former political candidate appalled by politics, a dissident who views himself as part of the team. An idiosyncratic figure, Richard Fisher has drawn attention lately as one of three members of the Federal...
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2011-47-18
Tuesday, 18 Oct 2011 02:47 PM
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