Central banks to closely watch U.S. economy amid subprime woes

Central banks from rich and developing nations agreed Monday to keep a close watch on the impact of subprime mortgage turmoil on the U.S. economy as well as on financial markets worldwide, after talks at the Bank for International Settlements in the Swiss city of Basel.

European Central Bank President Jean-Claude Trichet, who chaired the meeting, cautioned that there is ''no time for complacency,'' citing excessively volatile movements in financial markets and growing market uncertainty.

Trichet called for the U.S. Federal Reserve Board as well as each country's central bank to closely observe and monitor the impact of the subprime problems.

Disappointing economic figures released in the United States have reinforced concerns that the country's subprime mortgage woes could slow down the U.S. economy, with rippling effects on the broader global economy.

Central bank governors from major developed nations as well as from emerging markets such as China gathered in Basel ahead of next month's Group of Seven financial meeting in Washington.

In addition to the governors, financial authorities from Japan, the United States and Europe were also invited to the BIS meeting. The officials were believed to have discussed measures against credit-rating agencies, which were heavily criticized for not taking appropriate and timely steps to address problems over U.S. housing loans, according to sources at the meeting.