Federal Reserve Gov. Randall Kroszner today dampened hopes for another cut in the benchmark 4.5% fed funds rate, saying he expects the U.S. economy to weather a rough patch.
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, Mr. Kroszner said in remarks before an Institute of International Finance conference in New York.
Ahead of Mr. Kroszners remarks, fed funds futures priced in a 90% chance of another 25-basis-point cut in the fed funds when policy-makers next meet on Dec. 11.
Mr. Kroszner added that the U.S. central bank may have done enough to offset housing woes and credit markets turmoil when it lowered the funds rate by a combined 75 basis points in September and October. With those actions, the downside risks to economic growth now appear to be roughly balanced by the upside risks to inflation, he said.