We are far short of maximum employment. And I expect inflation to fall this year below the 2 percent level that we view as consistent with our mandate. This is clearly a situation in which we have to keep applying monetary policy stimulus vigorously… Under current economic circumstances, most Fed policymakers judge that near-zero short-term interest rates will be appropriate well into 2014.

"There will be no QE3," Dallas Fed President Richard Fisher told reporters after a speech here. "I will support no QE3, no additional mortgage-backed securities, no additional Treasuries."

"Wall Street keeps dangling QE3 out there," Fisher said. "I think it's a fantasy of Wall Street - it's not going to happen, it's not necessary."

I think the current policy stance is appropriate for an outlook of steady, moderate growth with gradual employment gains. I do not see this accommodative policy compromising the objective of 2 percent inflation.

At the moment, I favor a policymaking posture I'd call "vigilant restraint."

Despite the extraordinary steps taken to support the economy, many argue that monetary policy should do more. The argument is that while inflation may be close to our target, unemployment remains elevated, and thus, monetary policy must act more aggressively if it is to meet its mandated employment objective.

I disagree and believe that doing so would lead us down a very treacherous path — one that would be ever more difficult to navigate and one that would increase the already substantial risk of higher inflation. But the problem is not just inflation risk down the road. Prolonged efforts to hold interest rates near zero can lead to financial market distortions and the misallocation of resources.

This is a situation in which there’s no conflict between maximum employment and price stability. With regard to both of the Fed’s mandates, it’s vital that we keep the monetary policy throttle wide open.

I need to see significant deterioration in the economy and some threat of deflation or inflation moving significantly below our inflation target before I would consider more QE.

There’s “only so much headroom to do further Treasuries” beyond the short term, Williams said. He said that he’s in a “close-call space” in seeking a third round of quantitative easing, which will depend on “risks to the forecasts.”

“Right now, my baseline forecast” for the economy “is not a satisfactory forecast,” he said. “Just based on the forecast, you’d want to boost the economy.” Still, it’s not a slam dunk” and “you’d want to weigh the costs and benefits,” he said.

Near-zero rate policy has its own costs. If we were proposing to remain near-zero for a few quarters, or even a year or two, one might argue that such a policy matches up well with the short-term business cycle dynamics of the U.S. economy. But a near-zero rate policy stretching over many years can begin to distort fundamental decision-making in the economy in ways that may be destructive to longer-run economic growth.

I was … opposed to stretching this out, putting the late 2014 date in the statement. I am very disappointed with this. I thought it was an opportunity for the committee to get away from calendar dates and the committee didn't do that. I would have defected on this issue. I've been vocal about this before. I think the chairman correctly said that we can't forecast accurately that far ahead. He said it in a very - very funny, actually.

My only guess is that we will have to move before but I just got done saying we tried to forecast, so - you'd be better off to say wait and see, but I put it in 2013 so - but that's just my best guess.

You have to get started on normalizing rates at some point and it's not that once you move off zero and you go to 50 basis points, or 75 basis points, you don't exactly have a tight monetary policy. You still have extremely low interest rates by any normal metric and so it takes a while to turn the ship. So, to say that you're going to wait for such a long time to come off zero seems to me to be inconsistent with the way that the committee has behaved in the past and wanted to get going on the process, understanding that you're still providing a lot of accommodation to the economy even when it's only 1 percent or 1.5 percent, or 2 percent.

People outside the Fed have “mentioned that maybe you needed to do well over a trillion dollars in asset purchases in order to begin to move things,” the regional chief told reporters today during a meeting at the bank. “I don’t have a particular number in mind, but it would be more ambitious than most numbers being bandied about.”

“I was not supportive of the most recent decision to extend the time frame for exceptionally low rates through 2014,” Plosser said. He also didn’t support the practice of “offering forward policy guidance by saying economic conditions are likely to lead to low rates through some calendar date.”

“Monetary policy should be contingent on the economic environment and not on the calendar,” said Plosser, who is not a voting member of the FOMC this year.

“Continuing to signal that we want to try to ease more raises into question our confidence in the economy,” Plosser told reporters after the speech.

“I worry about this accelerationist view that we have to go ever faster on the pedal of monetary policy,” Plosser said. “You run the risk of runaway inflation, distortions in the marketplace, bubbles and so forth.”

Rates near zero are “punishing savers” and could be leading portfolio managers to take “unwise risks,” Plosser said. While the Fed’s goal has been to encourage a move to riskier assets, “we don’t know the full consequences of that,” he said.

At the recent meeting that concluded on January 25, this guidance stated that the Committee currently anticipates that 'economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.'

"I dissented because I do not believe economic conditions are likely to warrant an exceptionally low federal funds rate for so long. I expect that as economic expansion continues, even if only at a moderate pace, the federal funds rate will need to rise in order to prevent the emergence of inflationary pressures. This increase in interest rates is likely to be necessary before late 2014.

"In addition, the Summary of Economic Projections (SEP) now contains detailed information on the forecasts of Federal Reserve governors and Reserve Bank presidents for the evolution of economic conditions and the federal funds rate under appropriate policy. My dissent also reflected the view that statements about the future path of interest rates are inherently forecasts and are therefore better addressed in the SEP than in the Committee's policy statement.

As I've said in my statement and as we have in fact in the FOMC statement, you know, we continue to review our holdings -- our portfolio holdings, securities, and we are prepared to take further steps in that direction if we see that the recovery is faltering or if inflation is not -- is not moving toward target.

So that's something -- that's an option that's certainly on the table. I think it would be premature to say definitively one way or the other, but we continue to look at that option, and if conditions warrant, we will certainly consider using it.

In response to a question about additional asset purchases.

I don't accept the premise that we've been passive. We've been actually quite active in our policy. And in one respect, the low level of inflation is a validation in the following sense, that there were some who were very concerned that our balance sheet policies and the like would lead to high inflation. There's certainly no sign of that yet. And it hasn't shown up either in financial markets or in outside forecasters' expectations.

    Now, that being said, as I -- as I mentioned earlier, if the situation continues with inflation below target and unemployment declining at a rate which is very, very slow, then more -- our framework, the logic of our framework says we should be looking for ways to do more.

    It's not completely straightforward, because, of course, we're now dealing with a variety of nonstandard policy tools. We can't just lower the federal funds rate 25 basis points like in the good old days.

    But -- but your basic point is right, that, you know, we need to adopt policies that will both achieve our inflation objectives and help the economy recover as quickly as is feasible.     And I would say that your question actually, and the earlier question, shows a benefit of explaining this framework. Because the framework makes very clear that we need to be thinking about ways in which we can provide further stimulus if we don't get some improvement in the pace of recovery and -- and -- and a normalization of inflation.