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Fed's Fisher says U.S. is 'drowning' in unemployment

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The United States is "drowning in unemployment," its economy is running at stall speed and inflation is "not a problem," but easier monetary policy is not the answer, one of the Federal Reserve's most hawkish policymakers said on Friday.

"We've had a recovery that is quite disappointing," Dallas Fed President Richard Fisher said.

But without more certainty on tax policy and regulation, he said, "all the monetary accommodation in the world" will not get businesses hiring again.

In particular, businesses are unable to plan for the future as long as a raft of spending cuts and tax increases dubbed the 'fiscal cliff' looms at the end of the year, he said.

"A short-term fix to the fiscal cliff will do nothing but push out the envelope of indecision and we will continue to be plagued by high unemployment," Fisher said.

The Fed this month said it would buy $40 billion US in mortgage-backed securities each month to lower borrowing costs in an effort to boost employment, and pledged not to stop buying until the labor market improves substantially, as long as inflation remains under control.

Unemployment has been above 8 percent for more than three years; inflation is currently below the Fed's goal of 2 percent.

Fisher, who opposed the new round of stimulus, said he agreed that the issue of the day is jobs and putting people back to work, but was concerned that the Fed could lose its focus on inflation.

"I do think that it would be a dangerous thing if we were to abandon containing inflation and inflation expectations to achieve employment targets," Fisher told reporters after the speech. "We have to make sure that we carefully work on both fronts."

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