Inflation-tolerant Fed would spur backlash: Fisher (Reuters)

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)

Source: http://us.rd.yahoo.com/dailynews/rss/economy/*http%3A//news.yahoo.com/s/nm/20110912/bs_nm/us_usa_fed_fisher_inflation

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