Nov. 10 (Bloomberg) -- Federal Reserve Bank of Dallas President Richard Fisher said U.S. economic growth and inflation may persist below ideal levels into 2011, making the central bank’s current interest-rate stance “appropriate.”

“Looking into 2010 and perhaps to 2011, the most likely outcome is for growth to be suboptimal, unemployment to remain a vexing problem and inflation to remain subdued,” Fisher said in a speech today in Austin, Texas. “Our current policy is appropriate.” Responding to audience questions, he said the dollar is undergoing a “rather orderly depreciation.”

Fed officials after a meeting last week reiterated a pledge to keep the benchmark interest rate near zero for an “extended period.” The unemployment rate exceeded 10 percent in October for the first time since 1983, and U.S. banks kept tightening lending standards for companies and consumers last quarter.

“It may be some time before significant job growth occurs and even longer before we see meaningful declines in the unemployment rate,” Fisher, 60, said in remarks to the Austin Headliners Club. He said he sees “more immediate deflationary pressures than inflationary ones.”

Fisher, the Dallas Fed’s president since 2005, doesn’t vote on interest rates this year. He dissented five times in votes by the Federal Open Market Committee last year, favoring tighter monetary policy.

The FOMC’s Nov. 4 statement had a “host of caveats” for its assertion that the economy is picking up, Fisher said. In addition, a “full resuscitation of bank credit has yet to take place and will take considerable time,” he said.

‘Mindful’ of Risks

A former money manager, Fisher said he’s “particularly mindful of the risks” the Fed runs by stating that interest rates will stay “exceptionally low” for a long time. That can fuel the so-called carry trade, where “speculators” borrow U.S. dollars and earn bigger returns by investing in securities denominated in other currencies, he said.

“Were this to become a disorderly influence, I would expect the FOMC and other authorities to craft an appropriate remedy,” Fisher said.

Responding to audience questions, Fisher said the contraction in the commercial real estate market probably has not “run the full course,” and regulators will have to decide how much “forbearance is appropriate,” Fisher said.

Fisher said he wasn’t in favor of the Fed’s $300 billion Treasuries-purchase program because he was “worried about the perception that the Federal Reserve would monetize debt.”

Fed’s Determination

“We are not doing that,” and no one should doubt the Fed’s determination not to monetize deficits, he said.

San Francisco Fed President Janet Yellen said today monetary policy needs to be kept accommodative to encourage job growth and keep inflation from declining further.

Until the time comes to raise interest rates, “we need to provide the monetary accommodation necessary to spur job creation and prevent inflation from falling any further below rates that are consistent with price stability,” Yellen said in a speech in Phoenix.

Richmond Fed President Jeffrey Lacker said today in an interview with CNBC that U.S. consumer spending should rise at a “modest” pace in coming months and problems in commercial real estate should be “manageable” for banks.

Boston Fed President Eric Rosengren, speaking in London, said rising unemployment and low inflation suggest it’s not yet time to start removing monetary stimulus from the U.S. economy. “Both elements of our mandate are moving in the opposite direction,” he said in response to a question after a speech to the European Economics and Financial Centre in London.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net; Steve Matthews in Austin, Texas, at smatthews@bloomberg.net.

Last Updated: November 10, 2009 21:34 EST