Fed Governor Ben Bernanke said the U.S. central bank had ``no reason'' to raise short-term interest rates so long as price pressures remained at bay.
``In my view, the Federal Open Market Committee has little reason to undertake significant tightening so long as inflation remains low and promises to remain subdued, as it does today,'' Bernanke told a Bloomberg news agency panel in New York.
Later, asked about the chances of another cut in the 1.00 percent federal funds rate, Bernanke said: ``In my mind it's certainly possible, if the economy grows more slowly than we hope, if labor markets remain very soft, in which case more stimulus might be necessary.''
The commitment to keep rates low sparked solid gains in Treasury bond prices on Thursday, since bond investors in recent weeks have started to worry about rising interest rates.
In Seattle, San Francisco Fed President Robert Parry said in the unlikely event that U.S. economic growth disappoints, the central bank could still cut interest rates.
``If the economy were to underperform, we have room to cut rates,'' said Parry, a voting member of the Fed's policy committee. He stressed he thought this was unlikely.
Dallas Fed President Robert McTeer echoed the belief that further falls in inflation were more likely than inflation taking off.
``The outlook for inflation seems very positive to me for some time to come, and therefore, I doubt that there will be a need to fight inflation for quite awhile,'' McTeer told the Dallas Chamber of Commerce. |
