DENVER (Reuters) – Kansas City Federal Reserve Bank President Thomas Hoenig said on Tuesday he does not expect the U.S. economy to experience a damaging downward price spiral unless there is a new shock to the system.
"A drive in deflation like (during) the Great Depression is extremely harmful. That is an unlikely outcome unless we have a crisis," he said in response to questions after a speech.
The Federal Reserve -- the U.S. central -- has signaled it is ready pump more cash into the economy to boost growth, reduce the 9.6 percent unemployment rate and lift inflation from undesirably low levels payday lenders.
"As desperate as I am to see unemployment drop down, I don't want to take short-term measures that I don't think in the long run will solve that problem" and may in fact make it worse, he told the National Association of Business Economics.
(Reporting by Ann Saphir; Writing by Mark Felsenthal and Jason Lange; Editing by James Dalgleish)
