Richard Fisher, who heads the Dallas branch of the Fed, said that the world's biggest economy is no longer in need of further stimulus and the real question is when to begin tightening monetary policy. To embark on a third round of quantitative easing (QE) would "only prolong the injustice inflicted" on savers through inflation, Mr Fisher said.
The Fed started a second, $600bn (367bn pounds) round of QE in November in an effort to ward off the threat of deflation and ignite a recovery that has made little dent in unemployment. The move sparked criticism outside the US that it would fuel inflation, while domestic opponents argued it threatened to debase the dollar.
Mr Fisher, who become a voting member of the Fed's rate-setting committee this year, said in a speech in Frankfurt that "there's lots of liquidity sloshing around the US financial system. We are seeing signs of all the intoxication that typically takes place when we have the ambrosia of cheap and readily available capital."
The current round of QE will see the Fed purchase about $600bn of US government debt from financial institutions in the hope that the proceeds are then lent and invested in the wider economy. Ben Bernanke, the Fed chairman, has staunchly defended the plan, arguing that when it began the recovery was in danger of losing significant momentum.
The blitz of fresh stimulus for the economy, which Congress added to with an extension of a tax cut in December, has prompted Wall Street economists to pencil in higher gross domestic product this year.
Mr Fisher said he would have voted against further QE if he had been making a decision in November.
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