Former Federal Reserve officials William Poole and Susan Bies said
it wouldn’t be wise for policy makers to cut the benchmark U.S.
interest rate below the current 2 percent. "We have an adjustment in
housing that has to take place,” Poole, former president of the St.
Louis Fed, said during a one- hour Bloomberg Television special,
"Surviving the Slowdown,” yesterday. "I do not think rate cuts are
going to solve the basic problem.”
The former Fed officials’
remarks underscore the risk that more rate reductions may fan
inflation, which is accelerating because of rising prices of food,
energy and other commodities. The Fed said "uncertainty about the
inflation outlook remains high” and indicated it’s ready to pause its
rate cuts by dropping a reference to "downside” risks to growth.
Poole, Bies Say More Fed Rate Cuts Wouldn’t Stem Slowdown Much
Vivien Lou Chen and Kathleen Hays
Bloomberg May 1 2008