The Federal Reserve could “sit back” and let the bond market play the role of automatic stabiliser in the economy, even amid concern over the housing slowdown, Bill Poole, president of the St Louis Fed, has told the Financial Times.

Mr Poole, who is a voting member of the Fed’s policymaking open market committee (FOMC), said that the fall in long-term interest rates within the bond market had reduced pressure on the Fed to respond immediately to signs of economic weakness.