Aug. 15 (Bloomberg) -- William Poole, president of the Federal Reserve Bank of St. Louis, said there's no sign that the subprime-mortgage rout is harming the broader U.S. economy, and an interest-rate cut isn't yet needed.

``I don't see any impact as yet on the real economy or on the inflation rate,'' he said in an interview in the bank's boardroom. ``Obviously, there could be an impact, but we have to rely on some real evidence.''

Barring a ``calamity,'' there is no need to consider an emergency rate cut, Poole said. His comments were the first by a Fed official since the U.S. central bank joined counterparts in Europe and Asia to inject emergency funds after a surge in money- market rates. The Fed has added $71 billion of reserves in the past five trading days.

Poole, 70, said businesses have maintained their hiring and investment plans and banks have sufficient capital to weather the credit-market turmoil. The St. Louis Fed chief stressed that the best course is for policy makers to assess the latest economic data when they next meet Sept. 18. The comments contrast with the certainty that traders put on a rate cut next month.

``If the data confirm the market's view that the economy is sagging, we'll have to decide whether to share that view,'' said Poole, who votes on the rate-setting Federal Open Market Committee this year. He cited the monthly jobs, retail sales and industrial production reports as key gauges he'll be watching.

Widest Since 2001

The yield on the September federal funds futures contract closed at 4.95 percent today, indicating at least a quarter-point reduction in the Fed's target. The benchmark two-year Treasury note yielded 4.29 percent, the furthest below the Fed's benchmark since 2001, when policy makers were lowering rates.

``There's no way the Fed is going to reduce interest rates before the meeting,'' said former Fed Governor Lyle Gramley, now senior economic adviser at Stanford Group Co. in Washington. ``Bill is just being realistic that we haven't seen anything going on in markets yet that would warrant that kind of action.''

Poole acknowledged that the credit-market turmoil will ``stretch out'' the ``adjustment'' in the housing industry. He said he couldn't predict how long the downturn will last.

The upheaval in credit markets was caused by deepening losses on securities backed by U.S. subprime mortgages. BNP Paribas SA, France's biggest bank, shocked investors Aug. 9 when it halted withdrawals from three funds just a week after its chief executive officer said the lender wasn't at risk.

Stocks Decline

While money market rates have retreated, stocks have continued falling this week on concern a drop in lending will hurt economic growth. The Standard & Poor's 500 Index has fallen 6.1 percent in the past week, closing at 1,406.70 today.

Poole rebutted comments from some Fed watchers that the central bank may be out of touch with market developments. The criticism followed comments the St. Louis Fed chief made to reporters on July 31 that the slump in stocks was ``a typical market upset.''

``No one has called up and said the sky is falling,'' Poole said today. ``As I talk to companies, their capital spending plans are intact.''

Poole joined in the unanimous decision by Fed policy makers to keep the benchmark rate at 5.25 percent for a ninth straight meeting on Aug. 7. Officials said in a statement while risks to growth had increased, citing ``volatile'' financial markets, inflation remained the predominant concern.

Fed Response

Three days later, officials rushed to contain a crisis of confidence in markets, issuing a statement and pledging to inject funds ``as necessary'' to steer the benchmark federal funds rate toward the 5.25 percent target. The Fed also highlighted that direct loans were available through the Fed's discount window.

The St. Louis Fed chief said today that ``we will supply more cash as necessary'' to meet short-term demand for funds. He noted that ``we're very much in touch with the markets.''

``From experience, these things don't go on forever,'' Poole said.

Poole said he didn't regret that the Aug. 7 statement retained a bias against inflation. He also said that while consumer price gains are ``moving in the right direction,'' the ``job is not done.''

Inflation has slowed for four straight months under the Fed's preferred gauge, which excludes food and energy costs. The core personal consumption expenditures price index rose 1.9 percent in June after a revised 2 percent gain in May, the Commerce Department said July 31.

Poole, who plans to retire next year, is a former economics professor at Brown University in Providence, Rhode Island. He joined the St. Louis Fed as its president in 1998. The St. Louis Fed includes Arkansas and portions of Missouri, Mississippi, Tennessee, Kentucky, Indiana and Illinois.

To contact the reporters on this story: Anthony Massucci in St. Louis at amassucc@bloomberg.net; Scott Lanman in Washington at slanman@bloomberg.net

Last Updated: August 15, 2007 20:31 EDT