The Federal Reserve will do whatever it takes to ensure that the US does not fall into a deflation trap, vice-chairman Don Kohn said yesterday, as data showed consumer prices fell sharply last month.
His comments came as continuing worries about the global economy and concerns about the strength of banks' balance sheets pushed Britain's FTSE 100 index of leading shares down nearly 5 per cent. The remarks will reinforce expectations that the US central bank may cut interest rates again by as much as 50 basis points from the current level of 1 per cent in December.
