Fed's Lockhart: Need to ensure U.S. recovery is durable
(Adds comments from audience, media Q&A)
ATLANTA, Nov 10 (Reuters) - The U.S. economy has entered a recovery and policymakers should now focus on ensuring it is a durable one, a top Federal Reserve official said on Tuesday.
"Now that growth has resumed, the overall objective of economic policy should be to bring about a durable recovery and an environment that reduces unemployment as quickly as possible while containing inflationary pressures," Atlanta Federal Reserve Bank President Dennis Lockhart said.
Lockhart, a voter on the Fed's policy-setting Federal Open Market Committee, said achieving this objective will "necessarily involve judicious removal of government supports and the normalization of monetary policy."
Lockhart, speaking a week after the U.S. central bank reiterated its pledge to keep interest rates ultra-low for an extended period, struck a cautious note on the recovery. The Fed cut overnight interest rates close to zero in December and has held them steady since.
There are a number of "sobering aspects" of the economic picture, he told a conference sponsored by the Urban Land Institute. However, he said it was possible to envision scenarios in which the Fed had to raise interest rates even with unemployment high.
The U.S. economy grew at a 3.5 percent annual rate in the third quarter, snapping four down quarters and likely ending the recession that began in December 2007.
But labor market conditions remain dismal. The unemployment rate surged to a 26-1/2 year high of 10.2 percent in October, and economists expect it to hit 10.5 percent in mid-2010 before subsiding. [ECI/LT] Continued...
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