Exclusive: Fed's Fisher, outspoken hawk, sees no QE reduction this month

By Ann Saphir, Jonathan Spicer and Pedro da Costa

NEW YORK (Reuters) - One of the Federal Reserve's biggest critics of the U.S. central bank's asset purchases said that because of the fiscal standoff in Washington policymakers are unlikely to reduce stimulus later this month.

Richard Fisher, the hawkish president of the Federal Reserve Bank of Dallas, said that even he does not think he could make a case for scaling back bond purchases at the Fed's policy meeting on October 29-30.

"My personal opinion is that it's not in play," Fisher told Reuters on Tuesday. "This is just too tender a moment."

U.S. lawmakers were working on Tuesday to strike a deal to avoid a government debt default, as a Thursday deadline for raising the government's borrowing authority loomed. A default by the world's biggest economy could throw financial markets into turmoil and undercut economic growth in the United States and around the world.

If lawmakers fail to resolve the debt crisis, Fisher said, "Given what has happened in the marketplace, I personally would have a hard time arguing for us to dial it back" this month.

He said a possible short-term political agreement to delay the default threat to February, as Congress is debating, "doesn't solve the problem."

The Fed's purchase of $85 billion a month of Treasuries and mortgage-backed securities is meant to spur U.S. investment, hiring and economic growth. Investors were shocked when the Fed decided not to trim the year-old QE program at its policy meeting last month.

Fisher said he still believes the Fed should have acted in September, in part to burnish its communications credentials.

But even as the threat of a debt default looms, similar to what happened in August 2011, Fisher gave the Fed strong marks for its ability to respond as necessary. The Fed acts in part as the government's agent in the marketplace.

"I'm more confident that we, my colleagues and I, are better prepared than we were in 2011," Fisher said, citing an "informational feeling."

He expects U.S. economic data to be "sloppy" for a couple more months due to the partial government shutdown.

(Reporting by Ann Saphir, Jonathan Spicer and Pedro da Costa; Editing by Chizu Nomiyama and Leslie Adler)

Source: http://news.yahoo.com/exclusive-feds-fisher-outspoken-hawk-sees-no-qe-143831522--business.html
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