DALLAS (Reuters) - The Federal Reserve would risk public outcry, and indeed its very independence, if it allowed higher inflation as a way to heal the economy, a top Fed official said on Monday.
“I understand the theory. But I think we also have to consider how severe the backlash would be,” Dallas Fed President Richard Fisher told reporters after a speech to the National Association of Business Economics.
Chicago Fed President Charles Evans said last week that the Fed should be willing to tolerate a temporarily higher rate of inflation if doing so would help bring down the unemployment rate and help households get rid of debt faster.
“There’s a difference between theory and practice,” said Fisher who, unlike Evans, does not hold a PhD in economics and managed money before taking his current job. “I think it is important to take into account the consequences.”
Reporting by Ann Saphir, Editing by Chizu Nomiyama