WASHINGTON (Reuters) - Kansas City Federal Reserve President Thomas Hoenig said on Monday the U.S. central bank has done what it can to buffer the economy through a downturn, and a painful process of readjustment is likely ahead.
"The Fed has done about as much as it can do," he said in an interview on PBS's Nightly Business Report. Interest rates are already extremely low, he noted, according to a transcript of the program.
"We might put it out there, but banks are not able to, given their own capital constraints, able to lend as aggressively," he added.
Hoenig said he was surprised at how quickly economic activity has slowed, but that a sharp reversal of consumption was clearly a key development.
"The consumer factor was a major part of the strong slowdown and the actual entering into the recession," he said.
The Fed has cut interest rates to 1 percent from 4.25 percent this year, offered hundreds of billions of dollars in loans to financial institutions and helped bail out major firms as part of extraordinary efforts to cushion the economy.
Hoenig, who is not a voting member of the Fed's interest rate-setting committee, said there are likely tough times ahead.
"Part of it is working through the deleveraging," he said. "I don't know of any painless way to rebalance your economy, you have to go through this adjustment, and we will get through it, but it's not going to be without consequence," he added.
(Reporting by Mark Felsenthal; Editing by Dan Grebler)
Publié le 17 novembre 2008 Copyright © 2008 Reuters
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