Federal Reserve

Correction possible, but QE end needed: Fed Fisher

Richard Fisher's rate hike view unchanged
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Richard Fisher's rate hike view unchanged
US economy improving despite volatility: Fisher
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US economy improving despite volatility: Fisher

Dallas Federal Reserve President Richard Fisher told CNBC on Monday that recent stock market volatility has not changed his outlook for ending the central bank's bond-buying program "one iota."

"We've been floating this market with the Ritalin of easy monetary policy," said Fisher, a noted hawk. He's a voting member this year on the central bank's policymaking committee, which was poised to completely exit quantitative easing after next week's meeting.

With the Fed pulling back its accommodation, Fisher said he "could see a [stock] correction taking place." he added in a "Squawk Box" interview, however, "the underlying economy is doing well," which necessitates the move.

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Since the first days of Fed asset purchases after the 2008 financial crisis, "indiscriminate investing took place ... all boats rose regardless of underlying value," he said. "People will actually have to do work ... have to understand analysis in order to make good investments."

U.S. stock futures turned sharply lower in early trading, following today's big earnings miss from IBM. About 20 percent of the S&P 500 companies report earnings this week, including Apple after the bell today.

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Stocks closed out the past week lower by about a percent, after volatile trading that saw the Dow Jones Industrial Average move in a 900-point weekly range in a continuation of its triple-digit daily swings. Though the Dow did close 263 points higher Friday.

While Fisher said the market volatility comes as not surprise to him, he was cagey on when the Fed might start raising interest rates.

Expectations on Wall Street are for hikes to start in the spring or summer of next year. As far as timing, he said, "it depends on how the economy progresses here, we've had a sharp drop in national unemployment."

Fisher does not see inflation heating up anytime soon. "We have price stability."

Energy prices have been lower recently because of more supply not falling demand, he said. "This is a positive development. Good for consumers. Good for people that are buying gasoline."

Another question mark for the markets has been Ebola and Dallas has been ground zero for the concern in the U.S. Fisher said he does not see any economic impact at this point from the virus. "My major concern is overreaction by the media," he said.

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