U.S. Economy: Consumer Prices Decline, Reassuring Fed (Courtney Schlisserman)

  Nov. 16 (Bloomberg) -- Consumer prices in the U.S. fell more than forecast in October, which may reassure Federal Reserve policy makers who last month described inflation as a bigger worry than a slowing economy.

  Traders and economists initially seized on today's figures as evidence the Fed won't need to raise interest rates and may even cut them. Less inflation gives Chairman Ben S. Bernanke and his team more room to stimulate the economy should the housing downturn threaten to end the five-year expansion.

  ``The upward momentum in inflation has been broken,'' said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. ``The Fed has done its job.''

  Bonds rallied in the minutes after the report was released, before erasing their gains. Stocks advanced. A subsequent report from the Philadelphia Fed showed manufacturing expanded for the first time in three months, pushing bonds lower. Fed officials cautioned about reading too much into October's figures.

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