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Fed policy plus regulation strangling growth: ex-Fed Prez Richard Fisher

The Federal Reserve is the only institution in Washington acting to support economic growth, but its low-rate policy could be backfiring, former Dallas Fed President Richard Fisher said Thursday.

Fisher offered his assessment one day after the Federal Open Market Committee left rates unchanged and more members of the policymaking group indicated they anticipate just one hike this year rather than two.

Congress's failure to stimulate the economy through fiscal policy has forced the Fed to keep monetary policy accommodative, he told CNBC's "Squawk Box." But low rates are taking a toll on community and regional banks that lend to middle-income groups, he said.

That pressure, combined with over-regulation, is retarding growth, he said.

"There's very little incentive, together with the pincer movement of regulatory excess, for people to go out there and lend into job-creating enterprises," he said.

"It's a joint strangle on what moves our economy forward," he said.

Low rates have also slammed insurance companies, he noted. Since insurance provides the savings that many in the second and third income quartiles rely on, Washington is undermining the returns that protect the future of Americans' savings, he said.

Fisher said he believes the Fed needs to consider regulatory conditions when setting monetary policy, something he says never happened in his 10 years of attending policy meetings.

"I'm very worried longer term that this could be undermining the ability of the basic financial fabric of our country to do what it's supposed to do, which is to finance economic growth," he said.


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