Several economists said they expected the Fed to reduce its benchmark rate by another quarter of a percentage point, to 3.5percentt.
"It is clearly not the environment for the Fed to reduce borrowing costs," said Richard Yamarone, director of economic research for Argus Research.
"A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases.
Economists at Morgan Stanley said Friday that they expected the Fed to reduce its benchmark interest rate, perhaps to 1.25percentt from 1.75percentto to encourage new spending, and investors bid up stocks last week partly in hopes of a cut.
Under those circumstances, we still expect the Fed to reduce its monthly asset purchases by a further $10bn at the upcoming FOMC meeting later this month, particularly with the unemployment rate dropping to a five-year low of 6.7%.
Investors now expect the Fed to reduce its benchmark short-term rate, now at 3.5percentt, by at least another quarter-point and perhaps even by a half-point, when it next meets in October.
But based on other market barometers, investors still expect the Fed to reduce its benchmark interest rate, now at 4.5percentt, another quarter-point when policy makers meet on May 15.
As for Mr. Geithner, who became Treasury secretary in 2009, his spokesman, Anthony Coley, said, "Secretary Geithner was an early source of initiative at the Fed to reduce risk and make the financial system more resilient even before 2006".
Mr. Bernanke told the House Financial Services Committee that he still expected the Fed to reduce its $85 billion a month bond-buying program later this year, but he said the timing of such cutbacks would depend on the economic outlook.
Investors seemed to take the poor job performance and the rise in the jobless rate, which had been 5.6percentt in September, as an indication that the economy was weak enough to encourage the Fed to reduce interest rates, but not so weak as to harm corporate profits severely.
