More Fed easing could do harm: Hawks

Lacker said he was primarily concerned with the threat of inflation; Fisher said he was mainly worried that the policy would not work as advertised.

Bernanke was a chief supporter of the Fed8217;s move last month to try to boost the faltering US recovery by rebalancing the central bank8217;s securities holdings in a bid to spur borrowing by pushing long-term rates down further.

The 400 billion program,dubbed Operation Twist,drew three dissents,including Fisher8217;s.

We want to rekindle this economy; we don8217;t want,on the other hand,to kindle inflationary embers. I don8217;t think the latter is an issue right now,Fisher said in an interview on Bloomberg Radio.

He reiterated his view that US politicians need to lay a sounder base for economic growth,or the Fed8217;s easy monetary policy will simply be pushing on a string.

Fisher told CNBC television he expected the U.S. economy would grow at an annual rate of under 2 percent over the remainder of the year,but he warned: We could slip.

Speaking at his alma mater,the University of Wisconsin,Madison,Lacker said he was not worried about the specter of recession. Calling recent economic data disappointing,he said it was nevertheless consistent with moderate economic growth.

And despite the high unemployment rate,which stood at 9.1 percent in August,the problems holding back the economy are largely beyond the Fed8217;s control,he said.

Those problems include a mismatch between the skills workers have and those that employers want,and uncertainty over future regulation.

With inflation running above the Fed8217;s target rate of 2 percent,the central bank should be careful of doing anything to exacerbate price rises,which can occur even when unemployment is so high,Lacker said.

The Fed8217;s twist operation may do just that,he said.

It is more likely to raise inflation than it is to measurably raise growth,that8217;s my assessment,Lacker told reporters. Had he been a voter on the Fed8217;s policy-setting panel this year,he added,I would not have supported it.

Despite three dissents against looser monetary policy at each of the Fed8217;s last two meetings,policy is being steered by a core group led by Bernanke.

Fisher and Lacker both said that uncertainty was restraining businesses,and that many of the economic problems were beyond the central bank8217;s writ.

We have a limited amount of ammunition,Fisher told CNBC,adding that there were plenty of studies that suggested the Fed8217;s Operation Twist would not have that great an impact spurring stronger economic growth.

I personally did not feel that the benefits 8230; outweighed the costs,he said. I think we have done enough at this juncture.

Fisher,who has long argued that an uncertain regulatory and budget environment was damping business spirits,said he felt it would do little good to ease monetary policy because the level of interest rates was not the problem facing the economy.

Lacker concurred.

There are impediments to growth that somewhat lower,longer-term interest rates will not be the antidote for,he told students.