(Reuters) – The U.S. Federal Reserve’s latest policy actions are unlikely to do much to bring down unemployment and carry a “material” risk of sparking inflation, one of the U.S. central bank’s most hawkish policymakers said on Monday.
“I see material upside risks to inflation in 2014 and beyond, given the current trajectory for monetary policy,” Richmond Fed President Jeffrey Lacker told the Charlotte Chamber of Commerce Annual Economic Outlook Conference.
Lacker, who dissented at every Fed policy-setting meeting this year, also warned the central bank’s growing stable of assets makes it much more vulnerable to “small errors.”
The Fed is “straining to provide as much stimulus as possible without endangering our price-stability credibility,” he said on CNBC television. “My worry and the reason I dissented … is that we seem to be willing to test the limits of that credibility.”
Last week the Fed said it would buy $45 billion in longer-term Treasuries each month, on top of its monthly purchases of $40 billion in mortgage-backed securities, until it sees a substantial improvement in the outlook for the U.S. labor market.