WASHINGTON, Oct 12 (Reuters) - The U.S. Federal Reserve will consider all
options in seeking to stabilize credit markets in a period that may bring
negative growth, Dallas Fed President Richard Fisher said on Sunday.
"The Federal Reserve will continue to explore every avenue and consider
every option" to restore normal behavior in credit markets, Fisher said in
remarks to the Institute of International Finance.
Fisher said current financial turmoil will sharply cool the U.S. economy,
possibly sending it into a contraction for an extended period.
"It will be likely manifesting itself in a painful period of adjustment
of subpar and even negative growth for some time, possibly well into 2009," he
said.
(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama
+1 202 898 8310) Keywords: FINANCIAL/FED FISHER
(Adds quotes, background, Q&A response)
By Mark Felsenthal
WASHINGTON, Oct 12 (Reuters) - The U.S. Federal Reserve will consider all
options in seeking to stabilize credit markets in a period that may bring
negative growth, Dallas Fed President Richard Fisher said on Sunday.
"The Federal Reserve will continue to explore every avenue and consider
every option" to restore normal behavior in credit markets, Fisher said in
remarks to the Institute of International Finance.
Fisher said he was deviating from the common practice of Fed officials
representing only their own views in speeches and was instead speaking for "all
of us."
Fisher said current financial turmoil will sharply cool the U.S. economy,
possibly sending it into a contraction for an extended period.
"It will be likely manifesting itself in a painful period of adjustment
of subpar and even negative growth for some time, possibly well into 2009," he
said.
U.S. and European central banks cut rates in unison last week as part of
extraordinary efforts by governments to halt a terrifying meltdown in financial
markets. Finance ministers and central bankers pledged at meetings in Washington
this week to take steps to ensure bank deposits are guaranteed and to prevent
major financial institutions from failing, but stopped short of committing to
coordinated steps.
The Fed will "devote every ounce of its collective energy" to restore
normal market functioning, and will work with other agencies domestically and
internationally, Fisher said.
"We know we cannot go it alone," he said.
Fisher said coordination among central banks -- cutting rates in concert,
establishing currency swap lines -- demonstrates that individual countries are
unlikely to get into a race to lower currency values.
"The object is not to inflame a beggar-thy-neighbor policy," he said in
response to a question after speaking at the Institute of International Finance.
"We're extremely mindful of the fact that we're globally interlinked," he
added.
(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama
+1 202 898 8310) Keywords: FINANCIAL/FED FISHER
