Eaton Vance manager sees long Fed rate hold

NEW YORK (Reuters) - The Federal Reserve could keep interest rates on hold all the way through 2007 given the persistent risk of high inflation, a top municipal bond fund manager with Eaton Vance Management said on Tuesday.

Tom Metzold, vice president and portfolio manager of the Eaton Vance National Municipals fund, termed the United States economy fundamentally strong and said problems in the housing market were being overplayed.

"I'm not so sure the economy is slowing as much as people think it's slowing," Metzold said at the Reuters Investment Summit in New York.

"I don't think the Fed is going to cut rates any time in the near future. I am away from the general consensus that it will be early next year or even in the spring," he said.

Metzold said Federal Reserve Chairman Ben Bernanke and other Fed policy-makers were determined to prevent a repeat of the "devastating" high inflation seen in the United States in the 1970s, and would be "very slow to pull the trigger on an ease."

"I agree with Ben Bernanke in full force; ... don't inject liquidity into an economy that doesn't need it," he said.