Dallas Fed's Fisher Says No QE3 Needed

Viewpoint at odds with private sector expectations

Dallas Federal Reserve Bank President Richard Fisher said Thursday the U.S. economy is getting better and repeated his view that further quantitative easing, also known as QE3, was not needed from the central bank.

Fisher, who along with Kansas City Fed President Thomas Hoenig is often at odds with official central bank policy, said "The tone is a lot better. It's not brilliant; we don't have enough new hiring taking place, [but the number are] definitely moving in the right direction," Fisher told CNBC television.

"Given the improvement in the data that we've seen, things are getting better, not worse. I don't see any need personally for QE3 here," the possibility of which he recently called “a Wall Street fantasy” that won’t happen.

Indeed, private sector investors had expected fed action, with PIMCO CEO Mohamed El-Erian saying earlier this month that "my gut says we are likely to see [QE3], but the question is when and how big." 

The Fed has held overnight interest rates at or near zero since December 2008 and has indicated it will continue to do so at least until 2014 in order to stir economic growth.

The Fed’s balance sheet currently stands at $2.9 trillion, and some economists and strategists worry that more QE would risk inflation, CNBC notes.

“It’s almost like they hope something’s going to help push them along; that we’re supposed to give gifts to the Street. That’s not what we do,” Fisher said.

Fisher tempered his language somewhat Thursday, but still downplayed the Federal Reserve’s role in its ability to influence Wall Street success and failure.

“Our job is not to prop up the Street,” he said. “‘Fantasy’ may be too strong–wishful thinking, wantful thinking, if that’s word. But I would focus on the real economy. We focus on the real economy, and that’s our duty.”

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