Washington: Two Federal Reserve district bank presidents said the strengthening US economy is reducing the need for additional monetary easing.
"As the US economy continues to rebound and repair," additional steps "may create an overcommitment to ultra-easy monetary policy", St. Louis Fed President James Bullard said in a speech on Friday in Hong Kong. Atlanta Fed President Dennis Lockhart said in Washington that "we should hold the balance sheet where it is for the time being and watch how the economy evolves".
The remarks from Lockhart and Bullard, who have never dissented from a decision by the Federal Open Market Committee, reflect broadening sentiment on the panel against further steps to spur growth.
The Fed has held interest rates near zero since 2008 and purchased $2.3 trillion (Dh8.44 trillion) in bonds to spur growth after unemployment rose to as high as 10 per cent in 2009. The jobless rate is now 8.3 per cent, and the economy has been expanding for more than two years.
The Fed is hosting a two-day conference in Washington to examine challenges for central bankers, including the use of asset purchases to sustain liquidity during times of financial turmoil.
Chairman Ben Bernanke opened the gathering on Friday by saying central bankers "have had to deploy a variety of new tools and approaches to carry out their responsibilities regarding monetary policy and the provision of liquidity, tools about which we still have more to learn".
That conference features discussions including Fed Vice Chairman Janet Yellen, Bank of England Governor Mervyn King, Bank of Japan Governor Masaaki Shirakawa and former European Central Bank President Jean-Claude Trichet.
The Fed chairman on Friday didn't indicate if he sees a need for a new asset-purchase programme.
The economy expanded at a 3 per cent annual rate in the fourth quarter, the fastest pace in more than a year, as households spent more freely. Growth will probably slow to 2 per cent this quarter, according to the median of 72 economists' forecasts in a Bloomberg News survey from March 9 to March 13.
About 1.2 million jobs were created in the past six months, the most since the same period ended May 2006, Labour Department figures show.
The Fed's preferred gauge of inflation, the personal consumption expenditures price index, rose 2.4 per cent in the 12 months through January, above the central bank's 2 per cent inflation goal. Expectations of inflation five to 10 years in the future have also risen this year, according to a Fed gauge, with traders expecting 2.73 per cent inflation, up from 2.37 per cent at the end of 2011.
Michael Feroli, chief US economist at JPMorgan Chase, said he doesn't believe the central bank wants to push forward with more asset purchases, known as quantitative easing, "given where the inflation data are".
"If I am wrong, I think they would start signalling it in speeches," he said.