Fed's Evans: rate cuts cannot solve market woe

The Federal Reserve's key rate, the federal funds rate, is neither an adequate nor even an entirely appropriate tool for addressing instability in financial markets, said Charles Evans, the president of the Chicago Federal Reserve.

Further reductions in the rate cannot provide additional liquidity to the most distressed portions of the market, Evans noted, adding that keeping rates low over an extended period would risk igniting inflation expectations.

However, Evans stressed that the Fed's

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