One of the Federal Reserve's most hawkish officials confronted one of the institution's most dovish policymakers on Tuesday in a rare joint public debate over the risks posed to inflation by the U.S. central bank's bold steps to spur growth.
Policy dove Charles Evans, president of the Federal Reserve Bank of Chicago, and anti-inflation hawk Jeffrey Lacker, chief of the Richmond Fed, sparred pointedly and respectfully disagreed.
Evans stressed that the Fed was still "missing tremendously" on the employment side of its dual mandate, while its other charge, inflation, was well under its 2 percent goal.
"Our credibility will be judged by how we do on both sides of the mandate," he told a dinner event hosted by Virginia Commonwealth University.
Fed Governor Daniel Tarullo will be on CNBC at 8:30 a.m. ET Wednesday.
The Fed opted at its March meeting to keep buying bonds at a monthly $85 billion pace, while vowing to hold interest rates near zero until unemployment hit 6.5 percent, provided inflation remained under 2.5 percent.
The U.S. jobless rate in February was a lofty 7.7 percent and data due on Friday is expected to show that it remained at that level in March, while firms added 200,000 new jobs as the economy picked up steam.
(Read More: Monetary Policy Is Not Loose Enough: Fed Official)
Evans, a voting member of the policy-setting committee this year, was the key Fed leader who advocated for introducing thresholds for unemployment and inflation to guide expectations about how long it would hold rates near zero.
He said that recent payroll reports had been very positive and the economy looked like it would achieve "escape velocity" next year of 3.5 percent growth.
But Evans sounded a note of caution over swiftly scaling back the Fed's bond buying, and said that he wanted to see month-after-month of plus-200,000 new jobs created to be assured the labor market was on a durable upswing.
"At some point we will reduce the flow rate and end this program. But it could well be later in the year, or whatever. We're just going to have to look at the data and see how things play out," he said, while also stressing inflation was under control.
In contrast, Lacker, a hardline hawk who dissented at every policy meeting last year, cited hard lessons from history of what happened when the Fed allowed inflation to get out of hand.
"I'm not confident we can dial up expected inflation ... and then dial it down," Lacker told the dinner audience.
He also voiced concern the central bank would be willing to exit from its policy actions in time, and that a delay would sow the seeds of future inflation. "I see upside risks starting year and half, two years from now," he told the audience.
They were introduced by former Richmond Fed President Alfred Broaddus, who described them as the closest things to polar opposites on the Fed's policy committee as possible to find.
In separate remarks, Dennis Lockhart, president of the Atlanta Fed, said he expects the U.S. economy to expand a bit over 2 percent this year, though he does see some chance that the expansion could prove even stronger.
At the same time, Lockhart flagged short-term budget cuts from Washington as a risk to near-term economic performance. He also noted the U.S. labor market, while better, remains only a shadow of its pre-recession self. "Conditions in the broad labor market are quite mixed," he told an audience in Birmingham, Alabama, adding that he was still cautious about recent signs of economic strength.
A fourth Fed official, Minneapolis Fed President Narayana Kocherlakota, also spoke on Tuesday and reiterated his view that Fed policy was still too tight and ought to be eased further.