If there was one message from central bankers gathered at this mountain retreat this weekend it was this: Don't expect us to raise interest rates any time soon.

A series of speakers at the Kansas City Federal Reserve Bank's annual conference, which drew the monetary policy elite from around the world, heralded the global economy's apparent push out of its deep recession.

But they noted that economies were recovering only with extraordinary stimulus from governments and central banks, and said it was too soon to talk of a self-sustaining recovery.

I am a little a bit uneasy when I see that, because we have some green shoots here and there, we are already saying, 'Well, after all, we are close to back to normal,' European Central Bank President Jean-Claude Trichet said on Friday.

We have an enormous amount of work to do.

As ECB Governing Council member Ewald Nowotny told Reuters, there seems to be a consensus among central banks to make sure they do not withdraw their stimulus too soon. What we see now is that to a large part this is still a recovery sponsored by public measures, he said.

In the words of Harvard University professor Kenneth Rogoff: They don't want to go back into what we just got out of.


When officials gathered here last year, the credit crisis was far from tamed, but oil prices that had hit $150 a barrel were leading central banks to keep a wary eye on inflation.

Just a few weeks later, Lehman Brothers collapsed, ushering in the worst phase of a crisis that had already been raging for a year. The ECB wound up cutting interest rates to a record low 1 percent; the Fed slashed them to near zero; and both ramped up the liquidity they were pumping into markets.

That sharp shift in fortunes may now be serving as a cautionary reminder.

With Germany, France and Japan now free of recession, and with the United States seemingly shaking off its downturn as well, policy-makers have turned attention to how best to scale back the enormous stimulus they have provided.

Yet baby steps still seem to be the order of the day.

After the Fed's last meeting on August 11-12, the U.S. central bank said it saw the economy leveling. Fed Chairman Ben Bernanke on Friday went a step further, saying the prospects for a return to growth in the near term appear good.

The Fed, however, restated its expectation that the U.S. interbank overnight lending rate would remain exceptionally low for an extended period -- a reminder to financial markets of how far from normal officials believe things are.

St. Louis Federal Reserve Bank President James Bullard told Reuters the low-rate pledge means borrowing costs will stay low past the point where they would usually be raised.

I don't think markets have really digested what that means, he said.

Asked to sum up the message after the conference's first day on Friday, Jordan's central bank chief Umayya Toukan said the most important message was we should not be complacent just because the severity of the crisis is now behind us.