WASHINGTON — The turmoil that has plagued Wall Street in recent months may be calming down, although the situation remains delicate, a Federal Reserve official said Friday.

WASHINGTON — The turmoil that has plagued Wall Street in recent months may be calming down, although the situation remains delicate, a Federal Reserve official said Friday.

"We have tentative signs that the financial markets are beginning to recover from the recent upset, but financial fragility is obviously still an issue," William Poole, president of the Federal Reserve Bank of St. Louis said in prepared remarks in New York. A copy of his comments was made available in Washington.

Poole currently is a voting member of the Federal Open Market Committee, the group that includes Fed Chairman Ben Bernanke. It's the group that sets interest rate policy in the United States.

That panel last week voted to slash a key interest rate by a bold one-half percentage point to 4.75 percent. Fed policymakers hope the rate reduction will prevent the ill effects of the financial turmoil, a deepening housing slump and a credit crunch from throwing the economy into a recession.

It was the first time in more than four years that the Fed lowered its key rate. Some economists are predicting another rate cut when the Fed meets next on Oct. 30-31.

Persistent problems in financial markets could pose a threat to the country's employment climate, Poole said.

"If the upset were to deepen in a sustained way, it might have serious consequences for employment stability," he said. "As of today, we just do not know what the consequences may be," he added.

The economy lost a net 4,000 jobs in August. It was the first time in four years that had happened. Analysts believe job creation improved in September. The government releases the September employment report next week.

Poole, however, expressed some optimism that the economy would be able to weather the financial storm.

"My best guess is that the inherent resilience of the U.S economy along with future policy actions, should they be desirable, will keep the economy on a track of moderate average growth and gradually declining inflation over the next few years," he said.

Poole will retire from the regional Fed bank in March, ending a 10-year run at the helm.