Federal Reserve Bank President William Poole said on Friday that as yet, no formal rule could do a better job on monetary policy than current Fed practice, which financial markets predict well.

"Monetary economists have not yet developed a formal rule that is likely to have better operating properties than the Fed's current practice," Poole told the Cato Institute as he dubbed the current approach the "Greenspan rule."

Wading into a debate over whether the U.S. central bank would be better off with a more-structured and less-discretionary approach to policy, Poole said evidence suggested the Fed already had a rule-like approach.

"There is now a large body of evidence ... that Fed policy has been highly predictable over the past decade or so," he said. "If the market can predict the Fed's policy actions, then it must be the case that Fed policy follows a rule, or policy regularity, of some sort."

"It is highly desirable that policy practice be formalized to the maximum possible extent," Poole said. He added, however, that steps toward greater transparency at Fed had already yielded dividends in boosting policy predictability.

"In the future this predictability will, I am sure, be seen as one the hallmarks of the Greenspan era," he said.

Greenspan, who has led the central bank since 1987, is due to step down early next year.

"It will be in the interest of future Fed chairmen to commit to pursue policy regularities that work well," Poole said, adding he was hopeful "consistent and predictable" Fed policy would continue.

Poole, who is not a voting member of the central bank's policy-setting committee this year, ran through a litany of transparency-enhancing steps the Fed has taken, including its 2003 decision to add "forward-looking" language on its policy path in its interest-rate announcements.

The St. Louis Fed chief had previously voiced reservations about the forward-looking language -- such as the Fed's current formulation that a "measured" pace of rate hikes is likely -- worried it could constrain the central bank's actions.

"At a minimum, the (Fed's policy panel) can and should aspire to policy statements that are clear and do not themselves create uncertainty and ambiguity," Poole said.

He added that the adoption of the forward-looking language and an earlier decision to provide an assessment on the Fed's view of the risks facing the economy had "provided consistent signals about the direction of future policy actions."

Poole also said he regarded price stability as the most important Fed goal, since it was essential to achieve the central bank's other mandated objective of maximum employment. And he said he preferred the Fed adjust rates only at regularly scheduled meetings, unless the cost of waiting would be significant.

He also said the Fed's approach on focusing on changes in so-called core prices, which excludes food and energy costs, was appropriate, given that food and energy prices often were largely transitory.

He said one trouble in formulating a formal rule that would replicate the Fed's behavior was that it was difficult to account for "transitory and anomalous shocks," even though they were easy to identify when they hit

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