The Federal Reserve's new round of monetary stimulus is unlikely to do much for economic growth without a damaging rise in inflation, Richmond Fed Bank President Jeffrey Lacker said on Friday.
He also opposes the Fed's forward guidance on rates, in which policymakers expect to keep rates at very low levels until at least mid-2015. He believes, keeping the rates low is needed now, as the economy growth is “relatively modest”.
Lacker also reiterated his opposition to the Fed's mortgage bond purchases. He has often argued this favors one sector of the economy over another can affect the market.
U.S. unemployment fell sharply in September to 7.8%, and Lacker said continued healing of the job market should boost consumer sentiment and support household spending.
Lacker said he expects economic growth, which registered a paltry 1.3 percent annual rate in the second quarter, will pick up next year but he did not specify a forecast.