Fed policy-maker warns US near recession

The US economy could be slipping into recession and the Federal Reserve must cushion the pain, a top Fed policy-maker said in remarks supporting hopes for more interest rate cuts.

Dennis Lockhart, president of the Atlanta Fed, was one of six US central bankers speaking after government data confirmed anemic growth in the fourth quarter, which analysts say has since slowed further.

"It's clear the economy is in a slowdown that resembles past periods that were the leading edge of a recession," Mr Lockhart told a Rotary Club meeting in Chattanooga, Tennessee. "I believe that an important policy objective at this juncture is to ensure that this slowdown is short and shallow."

The Fed slashed benchmark lending rates by a hefty three-quarters of a percentage point to a three-year low of 2.25 per cent, in addition to the other measures it has introduced to keep money flowing in markets. Investors think it will trim rates by another 50 basis points at its next scheduled policy meeting, on April 29-30.

Meanwhile, Cleveland Fed Bank President Sandra Pianalto said a mortgage crisis that is pulling down housing prices is casting a pall over consumer spending and is "very detrimental to our economy."