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No More Easing, but No Rate Hikes Either: Fed's Fisher




By Jeff Cox, CNBC.com Senior Writer

NEW YORK ( CNBC) -- While saying "it's a little bit premature to talk about tightening," Dallas Fed President Richard Fisher also believes it's time for the central bank to stand down on any more stimulus.

In an interview with CNBC, Fisher said the economy is well on its way to recovery and not in need of any more quantitative easing measures, including an extension of the ongoing Operation Twist debt-buying measures.

The comments add to an increasing level of contradictory statements from Fed officials, who are weighing how strong the economic recovery is and what role the central bank should take.

"There's so much liquidity in the system," Fisher said. "Why would we add more unless we had a crisis on our hand or something was happening where we're seeing significant slippage in the economy?"

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Indeed, the Fed has expanded its balance sheet to nearly $2.9 trillion and is in the midst of the $600 billion "Twist," in which the central bank is selling some of its shorter-dated securities and buying longer maturities in an effort to drive down long-term borrowing rates.

Fisher has been no fan of the program, saying the Treasury buying and ensuing low rates have come as much from a crisis of confidence in the euro as anything the Fed has done.

To that effect, he argued, the U.S. economy is in much better shape than many of its global competitors and should have the opportunity to run on its own -- though he stopped well short of advocating that the Fed normalize monetary policy and begin raising interest rates.

"Our businesses are poised to take off," he said. "They're lean, they've got enormous productivity, they've cut their costs to the bone...We're in awfully good shape, and we're in much better shape, I would argue, than our counterparts overseas."

Inflation hawks, though, are arguing that the Fed needs to begin backing off its zero-interest-rate policy, which they believe will spark inflation the likes of what is being seen in surging gasoline prices.

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