Fed acting "hyperactively" on rates: Nobel economist

VIENNA (Reuters) - The Federal Reserve has been acting "hyperactively" as its latest interest rate cuts do not appear warranted by economic conditions, Nobel prize winner Edmund Phelps was quoted as saying on Wednesday.

"I'm not really thrilled by the Fed's interest rate cuts," Phelps told Austrian daily die Presse when asked if a further rate cut by the bank was the right way forward.

"The U.S. central bank is acting hyperactively at the moment. I see neither a decline in investments nor a huge drop in consumer spending that would explain such big interest rate cuts," he said according to comments published in German.

"Private consumption has been anything but catastrophic of late. The problem just now is the financial market shock caused by the banking crisis. A central bank can't solve this problem."

Phelps, an American professor at Columbia University who won the 2006 Nobel for economics, said the European Central Bank should not follow the example of the Fed, which is expected to lower rates on Wednesday after a 75 basis point cut last week.

"The European Central Bank should do nothing at all for the time being and leave its key rate unchanged. The Fed is responding to politicians calling for lower interest rates. The ECB should not follow this line," he said.

Phelps said rates should be cut when economic conditions warranted it, and that he did not see this in Europe.

"The European economy is performing better than the U.S. economy. Furthermore, the ECB's remit is clear: it must keep inflation in check," he added.

"One shouldn't ask too much of the ECB. A central bank can't keep inflation under control and create jobs."

(Reporting by Dave Graham)