Snow says Fed is wise to hold off rate rise

Snow said in speech on Monday 8 March that low inflation has allowed the Fed to delay hiking the federal funds rate.

"With core inflation as low as it is, it's really strikingly low, those impulses aren't there and they have been extraordinarily disciplined, I think, in watching and not overreacting to this situation," Snow said in remarks to the National Association of State Treasurers.

"So we have monetary policy accommodative to growth. With the tax cuts last year, we've got fiscal policy accommodative to growth," said Snow, who is President Bush's chief spokesman on the economy.

He also said the administration is not satisfied with the slow job growth despite strong overall growth. He said the strong productivity of the American worker is causing companies to take their time hiring new workers.

"The high productivity, while it's great for the economy...is probably a restraint on job creation," Snow told the audience.

Snow also repeated the Bush administration's position of its support of a strong dollar, while also declaring that the relative value of one currency against another is best set in open, competitive exchange markets.

"No currency can really be regarded as strong if it depends on life support, if it's being propped up by intervention," Snow said, adding that China was moving toward lifting its peg of the yuan to the dollar, even if such a move is not imminent.

"They can't do it tomorrow," he said, adding that Beijing "has embraced the idea that they want to go to fluctuating rates."