Two top Federal Reserve officials today suggested the US economy is unlikely to need lower borrowing costs even as it navigates a possibly rocky stretch in the economy.
"The current stance of monetary policy should help the economy get through the rough patch during the next year, with growth then likely to return to its longer-run sustainable rate," Fed Governor Randall Kroszner told the Institute of International Finance.
"A sequence of data releases consistent with the rough patch for economic activity that I expect in coming months would not, by themselves, suggest to me that the current stance of monetary policy is inappropriate," he added.
St Louis Federal Reserve Bank President William Poole, who like Mr Kroszner will have a vote on interest rates at the Fed's next meeting on December 11th, made comments in a similar vein, saying it would take an unexpectedly weak fourth quarter to bring about a change in the Fed's current policy stance.
Their comments led financial markets to slightly scale back their expectations of further rate cuts. US short-term interest rate futures implied an 86 per cent chance of a December rate cut, down from 94 per cent yesterday.
The Fed has lowered the overnight federal funds rate twice over the past two months, bringing the benchmark rate down to 4.5 per cent.
It cut the federal funds rate by a half-percentage point on September 18th and followed up with a quarter-point reduction on October 31th. Fed officials have described those cuts as a front-loading of what would be needed to help the economy through a deep housing downturn and credit market stress.