The Federal Reserve has more reason than ever to cut a key U.S. lending rate it has kept at just above zero since the depths of the financial crisis, a top Fed policymaker suggested on Tuesday.
The Fed set the interest rate it pays banks on their excess reserves at 0.25 percent when it introduced it in 2008, and it has sat there ever since.
Investors have lately been abuzz with speculation that the Fed could cut that rate as a way to signal its seriousness about keeping interest rates low even after it reduces its $85 billion-a-month bond-buying stimulus program.
"As everybody says, it's not going to be a game changer, but given that we're doing a lot of unconventional policy and pushing hard, I think it would make sense," San Francisco Federal Reserve Bank President John Williams told Reuters in an interview. "If you can get the funds rate trading a little lower and bring down interest rates a little lower, that's a positive."
(Read more: Will strong data hasten the taper?)
Williams is a strong supporter of the Fed's bond-buying program. On Tuesday, he said he believes that the Fed needs to do more to prove it is committed to keeping short-term rates low as long as needed to support the recovery.