But the president of the Chicago Fed has sounded a different note, emphasising the risk of higher inflation.
Fed funds futures traded on the Chicago Board of Trade have been indicating an 88% likelihood that rates would rise as the Fed ended its regular two-day meeting this week.
November Fed funds futures trading on the Chicago Board of Trade rose 0.13, to 95.0, indicating traders expect the fed funds rate to be cut to 5.00% from 5.25% in the next few months .
"If we mandate that the Fed is not involved in supervision then we make hasty, uninformed decisions inevitable when it is called upon as a lender of last resort, " said University of Chicago business school professor and Fed consultant Anil Kashyap in his prepared testimony.
Another Fed official, Michael Moskow, the president of the Chicago bank, said earlier this week that further rate increases might be needed, because inflation remained a threat.
U.S. economic reports due for release Friday include durable goods orders, personal income and outlays, the Chicago Fed national activity index, the University of Michigan consumer sentiment survey, and the Kansas City Fed manufacturing survey.
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U.S. economic data due for release Thursday includes the third-quarter GDP estimate, the weekly jobless claims report, the Chicago Fed national activity index, the University of Michigan consumer sentiment survey, the U.S. house price index and leading economic indicators.
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Four presidents of regional Fed banks will step into the rotation at the Fed's policy meeting in late January: Charles Evans of Chicago, Charles Plosser of Philadelphia, Richard Fisher of Dallas and Narayana Kocherlakota of Minneapolis.
This decision to explicitly state the conditions under which it is going to keep rates at near zero is a triumph for Chicago Fed President Charlie Evans who has campaigned for this kind of approach for years.
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