Dallas Federal Reserve President Richard Fisher, in remarks that were mainly about the need to reorganize banks that were "too big to fail," said the effectiveness of the Fed's massive bond purchases in helping the economy was fading.
"I believe that it is increasingly having a lesser impact as we go through time," Fisher said, when asked about the benefits of further so-called quantitative easing.
"(Borrowing) rates are the lowest they have been in a lifetime, but they have not come down as quickly as I would like ... to see, and I don't think, therefore, our policy has been as effective as we would like it to be," he said.
The Dallas Fed chief is counted among the most hawkish of the U.S. central bank's 19 policymakers in his concern about potential inflation.
The Fed pledged last month to keep buying $85 billion of Treasury and mortgage-backed bonds a month until there was a significant improvement in the outlook for the labor market, but said it was also monitoring the program's efficacy and costs.
Minutes of that December 11-12 meeting, released earlier in January, showed that several policymakers thought the bond purchases should be halted well before the end of this year.
The Fed has taken bold steps to boost the recovery and says it will hold interest rates near zero until unemployment hits 6.5 percent, from the current 7.8 percent, provided inflation does not breach a threshold of 2.5 percent.
Fed officials predict the U.S. economy will grow by between 2 percent to 3.2 percent this year, but are less optimistic on the prospects for employment, with forecasts for fourth-quarter unemployment ranging from 6.9 percent to 7.8 percent
Minneapolis Fed President Narayana Kocherlakota, speaking in Minneapolis, delivered his third speech in two days on why the Fed should hold interest rates ultra-low to ease policy further.
"Is it a panacea, will it cure all ills in the economy? Absolutely not," Kocherlakota said. "But given the goals that have been set for us by Congress, it's incumbent to move in the direction that we're supposed to move, and the policy path, the change that I've described, I think would be helpful."
'MODEST OR MODERATE' GROWTH
A Fed report released earlier on Wednesday found that economic activity across the United States increased at either a moderate or modest pace in recent weeks, but employment conditions had not changed.
"Hiring plans were more cautious for firms doing business in Europe or in the defense sector," the Fed noted in its Beige Book report, referring to uncertainty abroad and gridlock in Washington over fiscal policy.
That assessment, based on feedback gathered from its 12 districts and pulled together by the Philadelphia Federal Reserve on or before January 4, 2013, otherwise painted a cautiously positive picture of an economy gathering steam.
"Reports from the twelve Federal Reserve Districts indicated that economic activity has expanded since the previous Beige Book report, with all twelve Districts characterizing the pace of growth as either modest or moderate," the Fed said.
The previous report found the economy had jogged along at a "measured" pace.
In the current Beige Book, the Fed highlighted areas of improvement, most notably in the real estate sector and consumer spending, although manufacturing was more mixed.
(Writing by Alister Bull; Editing by Peter Cooney)
By Alister Bull and Ann Saphir