Europe's debt crisis threatens to throw a strengthening economy off track, but more monetary accommodation from the U.S. Federal Reserve is not the answer, a top Fed official known for his hawkish views on inflation said on Friday.

In a speech to the Austin Chamber of Commerce, Dallas Fed President Richard Fisher reiterated his long-held view that it is the overhang from the U.S. national debt and uncertainty over tax and regulatory policy that is holding back U.S. businesses, not insufficiently loose monetary policy.

And, he said, it is up to Congress and the President -- not the U.S. central bank -- to clean up the yucky mess that is the country's debt and fiscal problems.

The Federal Reserve has done everything it can, and more, to reduce unemployment without forsaking our sacred commitment to maintaining price stability, or crossing over the monetary river Styx into full-blown debt monetization, Fisher said in remarks prepared for delivery in the Texas capital. From my standpoint, resorting to further monetary accommodation to clean out the sink, clogged by the flotsam and jetsam of a jolly, drunken fiscal and financial party that has gone on far too long, is the wrong path to follow.

The U.S. central bank stood pat on policy at its meeting Tuesday, leaving interest rates near zero, and continuing to signal that it will keep them there through at least mid-2013. One policymaker, Chicago Fed President Charles Evans, dissented, calling for further easing.

Fisher, along with fellow hawks Minneapolis Fed President Narayana Kocherlakota and Philadelphia Fed President Charles Plosser, were the dissenters earlier this year as the Fed eased policy to jumpstart a slowing recovery.

Fisher on Friday said his votes were driven not by a fear that easing would stoke inflation but on concern it would not help on employment.

Inflation, he said, is headed back down toward the Fed's 2 percent target. Recent economic indicators suggest domestic demand is strengthening, he added.

Unemployment fell to 8.6 percent in November, the lowest in two and a half years, and regional factory activity has picked up, bolstering what has been a stop-and-start recovery from the worst downturn since the Depression.

But souring conditions in Europe and slowing growth in emerging economies like China and Brazil threaten to knock the U.S. recovery off course again, Fisher said, adding there is little U.S. policymakers can do but pray that fiscal and monetary authorities abroad get it right.

On the home front, though, the fix is within reach, he said.

Comparing the nation's problems with a clogged sink, Fisher warned against the Fed opening the spigots of liquidity further to flush out the detritus.

It may provide immediate relief but risks destroying the plumbing of the entire house, said Fisher, who often uses colorful metaphors and literary references to enliven his speeches. Better that the Congress and the president -- the makers of fiscal policy and regulation -- roll up their sleeves and get on with the yucky task of cleaning out the clogged drain.

Fisher and his fellow hawkish dissenters rotate off the Fed's policy-setting panel next year, and only one policy hawk -- Richmond Fed President Jeffrey Lacker -- will rotate in.

The change in voting line-up means the panel will lean more dovish than it did last year, suggesting Fed Chairman Ben Bernanke may have more support for further easing in the New Year.

(Reporting by Ann Saphir)

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