Yahoo - "Fisher: Fed to respond if inflation threatens" (8-16-06)

"There is a definite increase in inflationary momentum," Fisher told a real estate group. "The Federal Reserve will not tolerate inflation," he added, terming it the Lex Luthor to the "Superman" United States economy, referring to the superhero's nemesis.

Federal Open Market Committee voted this month to hold U.S. benchmark interest rates steady at 5.25 percent. That decision, taken with a single dissenting vote, paused a string of rate hikes made at 17 consecutive meetings over more than two years. Financial markets are split on whether the Fed will resume its tightening cycle. Fisher said the Fed "will watch and listen and 'taste' the indicators as they come in."

"If we see, after this pause, that inflation is beginning to threaten economic prosperity, we will take deliberate ... measures to counter it," he said. Even so, "that doesn't mean we need to take a sledgehammer to the economy."