Fed’s Kocherlakota sees slow U.S. recovery

By Ann Saphir

ST. PAUL, Minn., Feb 16 (BestGrowthStock) – The U.S. economy will
likely grow at a pace of close to 3 percent over the next two
years, slower than many private-sector economists forecast,
Federal Reserve Bank of Minneapolis President Narayana
Kocherlakota said on Tuesday.

While a recovery from the worst downturn since the 1930s is
underway, the outlook is clouded by regulatory uncertainty and
a still-weak banking sector, Kocherlakota said in the prepared
text of his first public speech since his appointment to the
top job at the regional Fed bank last September.

“I do think that the economy is on the mend and should
continue to recover over the next two years — in terms of both
GDP and unemployment — but at slower rates than we would
like,” Kocherlakota told a group of bankers in St. Paul,
Minnesota.

Unemployment is unlikely to fall below 9 percent this year
or 8 percent next year, he said.

“To get a true expansion in employment and in the economy,
the hiring rate has to pick up — and we have yet to see
evidence that it will do so in the immediate future,” he said.

On a more positive note, he said, the Fed has kept inflation
“at levels consistent with good long-run economic performance,”
he said.

“The news is mostly good on the inflation front, although
the need for careful policy choices is even more critical than
usual,” Kocherlakota said.

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(Editing by Chizu Nomiyama)

Fed’s Kocherlakota sees slow U.S. recovery