Fed hawk voices doubts over benefits of bond buying

A senior Federal Reserve official voiced skepticism on Wednesday about the benefits of additional asset purchases by the US central bank, while a more dovish policymaker maintained his campaign for additional policy easing.

Dallas Federal Reserve President Richard Fisher, in remarks that were mainly about the need to reorganize banks that were "too big to fail," said the effectiveness of the Fed's massive bond purchases in helping the economy was fading.

"I believe that it is increasingly having a lesser impact as we go through time," Fisher said, when asked about the benefits of further so-called quantitative easing.

"(Borrowing) rates are the lowest they have been in a lifetime, but they have not come down as quickly as I would like ... to see, and I don't think, therefore, our policy has been as effective as we would like it to be," he said.

The Dallas Fed chief is counted among the most hawkish of the US central bank's 19 policymakers in his concern about potential inflation.

The Fed pledged last month to keep buying $85 billion of Treasury and mortgage-backed bonds a month until there was a significant improvement in the outlook for the labor market, but said it was also monitoring the program's efficacy and costs.

Minutes of that Dec. 11-12 meeting, released earlier in January, showed that several policymakers thought the bond purchases should be halted well before the end of this year.

The Fed has taken bold steps to boost the recovery and says it will hold interest rates near zero until unemployment hits 6.5 percent, from the current 7.8 percent, provided inflation does not breach a threshold of 2.5 percent.

Fed officials predict the US economy will grow by between 2 percent to 3.2 percent this year, but are less optimistic on the prospects for employment, with forecasts for fourth-quarter unemployment ranging from 6.9 percent to 7.8 percent

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