Thursday August 17, 1:49 AM
Fed's Fisher: Inflation still greatest risk
DALLAS (Reuters) - Inflation is still the greatest risk to the United States economy, and policy-makers will not hesitate to raise interest rates again if incoming data suggests that is necessary, Federal Reserve Bank of Dallas President Richard Fisher said on Wednesday.
"There is a definite increase in inflationary momentum," Fisher told a real estate group. "The Federal Reserve will not tolerate inflation," he added, terming it the Lex Luthor to the "Superman" United States economy, referring to the superhero's nemesis.
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The Federal Open Market Committee voted this month to hold U.S. benchmark interest rates steady at 5.25 percent, pausing after raising rates at 17 consecutive meetings over more than two years.
"If we see, after this pause, that inflation is beginning to threaten economic prosperity, we will take deliberate ... measures to counter it," he said.
Fisher is not a voting member of the Fed's interest-rate setting committee in 2006.
He said U.S. gross domestic product growth for the second quarter was likely to be revised closer to 3 percent from its initial print of 2.5 percent, and third-quarter growth could be similar.
Fisher said the U.S. housing market is in the midst of a correction notable for its "suddenness and depth."
That downturn, as well as high energy prices and higher interest rates, are "definitely having an impact on the consumer," he said.