The U.S. Federal Reserve must act aggressively when interest rates are low, Fed Governor Laurence Meyer said on Tuesday in a speech that boosted hopes the Fed will cut rates again when it meets in two weeks.

In separate appearances, Meyer and Chicago Fed President Michael Moskow predicted a gradual pickup in the U.S. economy while St. Louis Fed President William Poole said he expected a turnaround "within a matter of a few months or few calendar quarters."

Meyer said when interest rates are low, as they are now, there is a risk that keeping rates steady could lead to a drop in inflation. That could weaken the Fed's ability to bring real interest rates -- rates adjusted for inflation -- to below zero, which is sometimes desired to inject some life into a struggling economy.

"It seems to me the appropriate response is to respond more aggressively to the downside prospects," Meyer told members of the St. Louis chapter of the National Association for Business Economics.

"The danger in waiting is that inflation might drift lower, ruining the ability to drive the real fed funds rate into negative territory as might be necessary," he said, stressing that he was not speaking on behalf of the Fed.

Bond prices rose following Meyer's speech as investors read it as a signal the Fed is prepared to cut interest rates for the 11th time this year when it meets on Dec. 11.

While many economists had been expecting the Fed to slice rates again next month, many market participants had begun to lean toward the opinion the central bank would make no move.

"It's a wake-up call to those who were beginning to take out the rate cut and pricing in interest rate increases," said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. in New York.

The Fed has already cut rates 10 times this year -- three times since Sept. 11 -- to bring them to their lowest level in 40 years. At 2.0 percent, the key fed funds rate, which influences borrowing costs across the economy, is still above several measures of inflation.

On Monday, the National Bureau of Economic Research's business cycle dating panel announced that a U.S. recession began in March. The six-member panel is considered the final word on U.S. recessions.

In a speech on Tuesday, St. Louis Fed chief Poole used the "r word" -- recession -- for the first time and predicted a turnaround in the economy would arrive shortly.

"Although the U.S. economy is in a recession, I am certainly not pessimistic about our economic prospects," Poole said, providing a laundry list of strengths he sees as currently in the economy's favor.

"There is no way to provide a reliable forecast of how quickly these fundamental strengths will show themselves in a clear revival of economic growth," he told the St. Louis chapter of Financial Executives International.

"But they will, within a matter of a few months or few calendar quarters. Of that, I'm confident."

While not advocating a more aggressive monetary policy stance in light of the low U.S. interest rates, Poole said they should not deter the Fed from cutting more.

"The only stopping place (for interest rates) that I see is zero and if going to zero is constructive, then we ought to do it," he told reporters after his speech, noting he was not making any predictions about the future course of Fed policy.

In another speech, Chicago Fed president Moskow said the United States was experiencing a period of  "quite weak" economic activity and the timeline for an economic recovery remained uncertain.

Although he did not label U.S. economic performance as recessionary, Moskow said, "Yesterday's announcement underscores the fact that the events of September 11 had a sudden adverse impact on the economy."

"The economic recovery that -- before September 11 -- we had expected to begin this year, will be delayed. We expect the economy to improve next year, although the timing of that improvement is uncertain," he told Chicago business leaders.

Both Moskow and Poole are voting members on the Fed's policymaking committee this year, following the usual rotation among Fed presidents.

The latest comments from Fed policymakers came on a day that offered mixed readings on the health of the U.S. economy.

The Conference Board, a private business research group, said its index of consumer confidence fell to 82.2 in November, suggesting the holiday shopping season will be sluggish. The index, now at its lowest level in more than seven years, fell unexpectedly from a revised 85.3 in October.

Sales of U.S. existing homes, meanwhile, rose 5.5 percent in October, the National Association of Realtors said, as consumers, recovering from the Sept. 11 attacks, took advantage of low mortgage rates.