Atlanta Fed president Dennis Lockhart says he is leaning in favor of further quantitative easing—or increasing the nation's money supply by buying securities—to help boost the struggling economy.
"I think QE 2 as it's called, can do some good," Lockhart told CNBC Tuesday. "I think it can help the economy and I think the risks that may be associated with it are acceptable."
Lockhart, a non-voting member of the Fed, added that quantitative easing could help lower interest rates and that in turn will help consumer spending and business investment.
"QE can improve a recovery that is going very slowly," Lockhart said. "It can improve the overall economy."
But Lockhart said the amount of QE has to be significant to have any effect.
"It doesn't make sense to do a small portion of QE," Lockhart added. "It has to be enough to make a difference. Something along the lines of $100 billion a month would be in range."
Lockhart described another possible round of monetary stimulus, which financial markets have all but priced in, as a sort of insurance policy against the risk that further disinflation could lead to a downward spiral in prices, or deflation.
"Third quarter GDP of 2010 will come in close to the second quarter which was at 1.6 percent and fourth quarter should be improved," Lockhart said. "The recovery will continue next year but very gradually. The prospect of disinflaton going into deflation has to be monitored."
Lockhart also said that he didn't see any quick recovery to the housing market.
"We're not seeing a broad improvement in housing," said Lockhart. "Even with the low interest rates, that's not going to spur housing. With bank requirements being tougher to get housing loans, there's not a rush to buy houses."
As for those living on fixed income losing money with the low interest rates, Lockhart said the Fed has to look at the whole picture when it comes to the economy.
"We are trying to manage the overall health of the economy," said Lockhart. "For anyone, including those on fixed incomes, a non-healthy economy is not going to help them."
Reuters contributed to this report.