A top Federal Reserve executive said today the US economy did not appear headed for recession and that the central bank was in a good position to provide a stable policy base to help volatile financial markets steady themselves over time.
St. Louis Federal Reserve Bank President William Poole said he does not see a recession on the horizon.
'Moreover, beyond our own judgements on that as forecasters, I don't think that the markets see (recession),' he added.
Poole, a voting member of the Fed's policy-setting panel this year, said expectations of US interest rate cuts this year, as implied by futures markets, had grown only slightly.
The St. Louis Fed chief said there were no 'underlying shocks' to explain the sharp drop in share prices over the past week, and that without a clearer view of what was behind the market turmoil it was better not to 'make any plans to have any policy adjustments.'
He also said it was not appropriate for the Fed to respond to stock market drops unless large or extremely disruptive, and said last week's decline would probably not prove significant historically.
