Quantitative easing must stop, say top Fed officials

AMERICA’S monetary stimulus should be withdrawn at the “earliest sign” of core inflation pressures taking hold, Richard Fisher of the Federal Reserve said last night.

And no extension of quantitative easing (QE2) is warranted, he said. It was “hard to envision a scenario where I would not formally dissent against another tranche of monetary accommodation,” Fisher stated.

Fisher’s Fed colleague Jeffrey Lacker added to the hawkish sounds at a separate meeting in Delaware.

The Fed should halt QE2 once the recovery is strong enough, Lacker said. “The distinct improvement in the economic outlook since the program was initiated suggests taking that re-evaluation [of bond purchasing] quite seriously,” he said.

However, in yet another speech by a senior Fed official, Dennis Lockhart played down the risk of inflation, suggest a reverse of QE2 was unnecessary.

“Underlying inflation is currently below the level that I would define as price stability,” he said.