Addressing an audience in London, William Poole head of the St. Louis Federal Reserve Bank said he projects higher risks of an economic downturn in the U.S., thanks to recent market turmoil. The crisis in the financial sector will certainly impact the housing sector, Poole noted, but the impact on the broader economy as a whole was not as clear-cut. Poole, currently a voting member of the Federal Open Market Committee, claimed that I think the probability of recession is higher than it used to be.

Keeping the rate-cut possibility an enigma, Poole said: What is not clear at this point is what the right policy response is to the changed circumstances ... a rate cut has to be in the context of the overall stance of monetary policy what is needed for the longer run for price stability and maximum economic growth.

From a podium across the Atlantic, Atlanta Federal Reserve President Dennis Lockhart told the Atlanta Press Club that he does not foresee housing and mortgage troubles spilling over to other sectors of the economy. These remarks followed yesterday's Beige Book report, which continued to show growth in most regions across the country. Lockhart also noted that: I'm confident that market conditions eventually will settle down.