Fed Governor Randall Kroszner said emerging market growth is being hampered by the current credit turmoil.

Speaking on the international financial system at a conference in Buenos Aires, Argentina, Kroszner said the challenge of dealing with slowing economic growth around the world has been "complicated" by higher food and energy prices.

"As the step-down in growth of gross domestic product (GDP) in a number of advanced economies became apparent, we also began to see reduced growth and prospects for growth in many emerging market economies, and stock markets in emerging economies declined sharply," he said.

"Throughout the world, the challenges posed by weakening economic activity were further complicated by mounting inflationary pressures as food and energy prices soared."

Kroszner added that he believes the initial assessment that the U.S. has decoupled from the rest of the world was incorrect, and that the global economy remains "closely connected" through both trade and financial linkages.

Kroszner did not comment on U.S. economic outlook or interest rates.

By Stephen Huebl