A top Federal Reserve official who opposed the U.S. central bank's move last month to ease monetary policy signaled Tuesday he may balk again if fellow policymakers opt for still more stimulus this month.
"The data in August did not justify the additional accommodation provided at that meeting,"
Minneapolis Federal Reserve Bank President Narayana Kocherlakota said in remarks prepared for delivery at the University of Minnesota's Carlson School of Management. "It is unlikely that the data in September will warrant adding still more accommodation."
The central bank, responding to signs that the U.S. recovery was faltering, last month eased its already super-loose monetary policy further with a promise to keep interest rates extraordinarily low through mid-2013.
Fed policymakers meet again in two weeks, where they are expected to discuss what further options there might be to support the economy further.
Short-term rates have been near zero since December 2008, and the Fed had already promised to keep them there for an "extended period." The central bank has also bought $2.3 trillion in long-term securities to lower borrowing costs further.
Kocherlakota was one of three Fed policymakers to dissent on the Fed's August decision to keep interest rates low until mid-2013.
On Tuesday, he said that extending the Fed's low-rate promise last month was "inconsistent" with the Fed's commitment to keeping inflation at or a bit below 2 percent. Given that inflation has risen and unemployment has dropped since the last time the Fed eased policy, he argued, the central bank should stand pat on policy, or possibly even tighten it.
Now that the Fed has made its new low-rate commitment, Kocherlakota said, it will be "nearly impossible to undo in the near term" and reiterated he would not push fellow members of the policy-setting Federal Open Market Committee to do so.
He did, however, suggest he would oppose doing more.
"I assess FOMC actions in light of the incoming data and the Committee's communicated objective of keeping inflation at 2 percent or a bit under," he said.
While unemployment, at 9.1 percent in August, remains "disturbingly high," the Fed could not have cut it further without pushing inflation up above 2 percent over several years.
Doing so, he said, would undermine the Fed's credibility, and hurt future efforts to keep inflation under control.
U.S. employment ground to a half in August, with the economy failing to create jobs for the first time in nearly a year, government figures showed.