Fed's Poole says U.S. likely to avoid recession

By Joanne Morrison

ST. LOUIS (Reuters) - The U.S. appears likely to avoid an economic slowdown but the chances of a recession have risen, St. Louis Federal Reserve Bank President William Poole said on Monday.

"I think the best bet is that we will not have a recession," he said in response to questions after a speech to the St. Louis chapter of the National Association for Business Economics.

However, Poole later told reporters, "There is no question that the odds (of recession) are higher than they used to be."

The St. Louis Fed president, who is retiring in March and will not attend the next scheduled interest rate policy meeting on March 18, said Fed interest rate targets are well-positioned to steady the economy against slowing growth and market turmoil.

"Policy is at a good place both for the long-run concern and for cushioning the impact of the financial disturbances we are now dealing with," he said.

The Fed cut interest rates by 1.25 percentage points to 3 percent last month to prevent the economy from sliding into recession as stock markets tumbled sharply and evidence mounted that the housing slump and a credit crunch were damping hiring and spending.

At the same time, even as the economy has slowed, inflation has climbed to levels higher than the comfort zone of some policy-makers.

However, Poole said that inflation expectations have remained steady.