FED "No Rush To Judgement" after Katrina

WASHINGTON, Sept 12 (Reuters) - Federal Reserve Bank of Dallas President Richard Fisher on Monday said the U.S. economy would rebound from the damage of Hurricane Katrina, but it was unclear what the devastation meant for monetary policy.
"How does Katrina alter the outlook? The truth is, we don't really know," he said in a speech to the Texas Banking Department, a text of which was made available in Washington.
"My inclination is to read, listen and watch and not rush to judgment about how the disaster will impact the economy or how monetary policy ought to respond," he said.
Fisher is a voting member of the central bank's policy setting Federal Open Market Committee this year.
It meets on Sept. 20, and some in the markets suspect Katrina could cause the U.S. central bank to pause a 15-month long campaign of raising interest rates in steady, quarter percentage point steps after the next hike, at 3.75 percent.
But these bets have been trimmed somewhat after oil prices retreated back under $64 a barrel, and amid a chorus of Fed policymakers stressing that the U.S. central bank must stick to its goal of keeping inflation under control -- implying it will keep raising rates.
Fisher sounded open-minded on what Katrina meant for the Fed, but made plain that he was not panicking about the implications for U.S. growth.
Drawing the comparison with the 1995 earthquake that flattened Kobe, Japan's second largest port, Fisher noted that despite colossal damage, Japanese growth rebounded strongly in subsequent quarters and the U.S. may be even more resilient.
"Every natural disaster is unique and no two countries are the same. Japan's economy in 1995 was nowhere near as dynamic and flexible as ours is today," he said.
"Among the American economy's strength are its size, diversity, interconnections and resiliency. I fully expect the economy to rebound from this disaster," he said.