A senior official from U.S. Federal Reserve said Tuesday that the financial market turmoil does not require a change in the central bank's target interest rate.

"Financial market volatility, in and of itself, does not require a change in the target federal funds rate," said Jeffery Lacker, president of the Federal Reserve Bank of Richmond, in a speech in Charlotte, North Carolina.

"Interest rate policy needs to be guided by the outlook for real spending and inflation," Lacker said.

"Financial turbulence has the potential to change the assessment of the appropriate rate if it induces a sufficient revision in growth or inflation prospects," he said.

In the days leading up to the Fed meeting on Aug. 7, said Lacker, many observers, citing the turbulent market conditions, called on and expected the Fed to lower its federal funds rate, interest that commercial banks charge each other on overnight loans.

But the Fed did not do that, but instead held the federal funds rate at 5.25 percent, where it had stood since June 2006.

"Even without a change in the interest rate target, the Fed has tools at its disposal that can help the market make necessary adjustments in times like these," the president said.

The Federal Reserve Bank of New York, acting on behalf of the central bank, has injected billions of dollars into financial system since Aug. 9.

"This has had the effect of automatically expanding the supply of reserves to the banking system as the demand for liquidity has risen during this market turbulence," said Lacker.

Also, the Fed decided last Friday to cut its discount rate, which the central bank charges to make direct loans to banks, to 5.75 percent from 6.25 percent. That was a "noteworthy" decision to boost liquidity in the banking system, Lacker said.