US government bears blame for slow recovery, says top Fed official

SYDNEY (REUTERS) - An ineffective, fractious and fiscally irresponsible government has slowed the US recovery and counteracted the stimulative effects of Federal Reserve's super-accommodative monetary policy, a top Fed official said on Monday.

"While the Fed has been moving at the speed of a boomer in full run, the federal government of the United States has at best exhibited the adaptive alacrity of a koala (without being anywhere near as cute)," Dallas Fed President Richard Fisher said in remarks prepared for delivery to the Australian Business Economists.

"Unlike in most recoveries, government has played a countercyclical, suppressive role," Fisher said in Sydney.

"The inability of our government to get its act together has countered the pro-cyclical policy of the Federal Reserve."

The Fed is buying US$85 billion (S$106 billion) in assets each month to spur growth and hiring by pushing down long-term borrowing costs. The programme is the Fed's third round of so-called quantitative easing, and last week it opted to extend its policy support after a series of soft readings on the economy.

Economists now think the Fed will wait until 2014 before starting to wind down asset purchases, although a clear pick-up in economic momentum could revive prospects for action at the Fed's Dec 17-18 meeting.

Fisher opposes the Fed's bond-buying programme because he said he believes it can do little to boost the economy as long as lawmakers continue to bicker over the budget and fail to confront long-term fiscal imbalances.

He has also warned that keeping policy too easy for too long could seed future inflation.

Fisher will vote next year on the Fed's policy-setting panel.