(Reuters) - The U.S. Federal Reserve's newest bid to lower borrowing costs should boost jobs and lift inflation to healthier levels, making the controversial action worth the risk, Boston Fed President Eric Rosengren said on Wednesday.

The Fed's decision in early November to pump $600 billion into the financial system by buying Treasuries faced strong opposition within the Fed as some questioned its effectiveness, and has since drawn criticism from abroad and domestically over its potential to create asset bubbles in emerging economies and feed inflation at home.

Such arguments miss the point that falling inflation was creating de facto and unintended monetary tightening that was choking a fragile recovery, Rosengren told the Greater Providence Chamber of Commerce.

Since Fed Chairman Ben Bernanke first hinted at a new round of easing in August, the program has driven down interest rates and boosted inflation expectations, and "should be broadly effective and helpful to the economy going forward," Rosengren said.

By 2012, he said, the Fed's latest action will likely have trimmed half a percentage point from the U.S. unemployment rate, adding the equivalent of 700,000 jobs. The jobless rate was 9.6 percent in October.

In recent days, New York Fed President William Dudley and Fed Board Vice Chair Janet Yellen also have defended the policy in rare on-record interviews, amid growing attacks from a chorus of Republican lawmakers and some economists. Chicago Fed President Charles Evans and Atlanta Fed President Dennis Lockhart also have taken public issue with the criticism.

On Tuesday, two prominent Republican lawmakers pledged to introduce legislation to strip the Fed of its jobs-focused mandate and concentrate solely on inflation.

Leaders in other countries have complained the Fed action will weaken the dollar, making their exports relatively more expensive and inviting unwanted hot money flows into higher-yielding assets of emerging economies.

Such concerns are overblown, Rosengren suggested on Wednesday. Rosengren, a voter this year on the Fed's monetary policy-setting panel, is known as a monetary policy "dove," focused more on the risks of high unemployment than on the threat of inflation.

While driving the dollar down is not the Fed's goal, "a modest currency depreciation is the normal consequence of easing monetary policy," he said.

In fact, he added, data show the Fed's current monetary accommodation has merely brought the dollar exchange rate back to where it was before the recession.

The new policy does carry some real risks, including the possibility of pushing inflation too high and expanding the Fed's balance sheet to unprecedented proportions, he said. But those risks can be managed, and the likely benefits make those risks "worth taking," he said.

"These actions are likely to reduce the unemployment rate and reduce the risk of further disinflation relative to not taking action," he said of the Fed's Treasuries purchases, set to run through mid-2011. "This is exactly what I hoped would be the result of the program."

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