Fed's Yellen:May not need more discount rate hikes

SAN DIEGO Feb 22 (Reuters) - The Federal Reserve may not need to further widen the spread between the interest rate it charges for emergency bank loans and the federal funds rate, San Franciso Federal Reserve Bank president Janet Yellen said on Monday.

The Fed last week raised the so-called discount rate to 0.75 percent from 0.5 percent. This increased the gap between the emergency borrowing rate and the overnight lending rate between banks to half a percentage point, or 50 basis points. The Fed's target for the overnight lending rate has been between zero and 0.25 basis points since December 2008.

Historically, the Fed kept the gap at 100 basis points to encourage banks to borrow in the private markets if possible.That 100-basis point spread was not arrived at scientifically, she said.

"There's no presumption that this is the first of many steps," Yellen told reporters after a speech at the University of San Diego business school. "It's perfectly possible that 50 will be adequate to accomplish everything."

(Reporting by Ann Saphir, additional reporting by Kristina Cooke in New York, Editing by Chizu Nomiyama)