The US economy may be slowing down from the torrid pace that prompted the Fed to raise interest rates six times in the last year, the Federal Reserve Bank of New York President Mr William McDonough said yesterday.

The vice-chairman of the interest rate-setting Federal Open Market Committee said data on the housing, automotive and durable goods sectors were all more subdued.

"Is [a] slowdown beginning to be visible?" he asked, in light of a report released yesterday, showing that US retail sales had fallen for the second month in a row. "There are a number of variables that would tell you `yes'."

Earlier yesterday, the Commerce Department reported that US retail stores rang up weaker sales in May after falling in April, thus raising expectations that the Federal Reserve will keep interest rates steady at its next meeting on June 27th and 28th.

The retail sales data came on the heels of other economic indicators that have convinced some analysts that the US central bank's year-long campaign of raising borrowing costs to stop the economy from overheating may be starting to work.

Mr McDonough said he thought the economy could grow by around 4.5 per cent a year without much inflation, due in part to gains in productivity. He noted, however, that the US economy has been growing at an even stronger pace.