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By Howard Schneider

WASHINGTON (Reuters) - Federal Reserve officials on Saturday took stock of a slowdown in the global economy and said it could delay an increase in U.S. interest rates if serious enough.

Most notably, Fed Vice Chairman Stanley Fischer said the effort to finally normalize U.S. monetary policy after years of extraordinary stimulus may be hampered by the global outlook.

If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise, he said at an event sponsored by International Monetary Fund.

Nevertheless, he said betting in financial markets on the timing of a U.S. rate hike appeared roughly on the mark given the Fed s current expectations on how the economy s recovery would unfold.

The IMF trimmed its global growth forecast ahead of its fall meetings this weekend, where discussions focused on ways to stimulate global demand and prevent the euro zone from slipping back into recession.

I am worried about growth around the world, there are more downside risks than upside risks, Fed Governor Daniel Tarullo said at a conference the Institute of International Finance sponsored on the sidelines. This is obviously something we have to think about in our own policies.

Chicago Federal Reserve Bank President Charles Evans said a strengthening of the dollar and weak growth abroad could mean slower inflation in the United States, and less justification for the U.S. central bank to raise rates.

The renewed concerns about Europe could represent a serious complication for the Fed, which had been expected to begin bumping up benchmark borrowing costs in the middle of next year.

Fischer spoke in part to calm concerns among developing nations about a potential tightening in U.S. monetary policy, saying the Fed would only move rates higher if the U.S. economy was ready for it. Overall, he said, rising borrowing costs in the United States were unlikely to disrupt flows of capital and investment around the world.

The normalization of our policy should prove manageable, Fischer said. We have done everything we can, within the limits of forecast uncertainty, to prepare market participants for what lies ahead.

In determining the pace at which our monetary accommodation is removed, we will, as always, be paying close attention to the path of the rest of the global economy and its significant consequences for U.S. economic prospects.

Large developing nations like India and Brazil have been concerned a rise in U.S. rates could suck investment away from their economies, just as they earlier criticized the Fed s bond-buying stimulus as a currency war that caused a fast increase in their currency values.

Fischer said in the keynote IMF address that the Fed s crisis programs, which pumped trillions of dollars into global markets, have on the whole benefited the rest of the world.

The net effect on foreign economies appears to be both modest in magnitude and most likely positive, on net, for most countries, he said.

In addition, he said U.S. central bank officials have given national governments and investors plenty of time and clear signals to prepare for a shift in policy.

The Fed is going to great lengths to communicate policy intentions, Fisher said. Markets should not be greatly surprised by either the timing or the pace of normalization.

(Reporting by Howard Schneider; Additional reporting by Jason Lange and Douwe Miedema; Editing by Andrea Ricci)


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