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Dallas Federal Reserve President Richard Fisher said Tuesday said that the country should exercise cautious optimism in the coming months as the economy recovers, as the housing industry is "still on life support."
Speaking before members of the Texas Christian University Business Network in Dallas, Fisher said while there are signs that the housing market has reached a bottom, it will not fully recover until market forces replace the massive amount of government support being used to keep the market stable.
"We have thus indicated to the marketplace that, for our part, the FOMC expects we will complete the execution of our $1.25 trillion intervention in the mortgage backed securities market by the end of the first quarter of next year," he said in prepared remarks.
The Dallas Fed chief also addressed inflation concerns posed by the expansion of the Fed's balance sheet during the financial crisis.
Fisher reiterated his past statements on inflation dangers and reminded those in attendance that he has voted in the past against monetary policy that he felt was "too accommodative."
"Given the lag between the time monetary policy is initiated and when it impacts the economy, that wind-down process needs to begin as soon as there are convincing signs that economic growth is gaining traction and that the lending capacity of the banking system is capable of expansion," he said.
"I am not alone on this front. I have faith my colleagues on the Federal Open Market Committee will stand and deliver in a timely way," Fisher added. "And I expect that when it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation."
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