Fed's Pianalto: will take years for U.S. jobs to recover

Reuters News
Posted: May 09, 2012 12:59 PM

WASHINGTON (Reuters) - The U.S. economy is recovering at a moderate pace but won't regain full employment for several years, a top Federal Reserve policy maker said on Wednesday.

"With an economy that's only gradually improving, it's going to take us several years to achieve that mandate," Cleveland Fed President Sandra Pianalto said in response to questions after a speech in Lexington, Kentucky.

"We need more growth in order for more jobs to be created and in order for that unemployment rate to come down to that 6 percent rate which I view as maximum employment," said Pianalto, who is a voting member of the Fed's policy-setting panel.

Fed Chairman Ben Bernanke said after the U.S. central bank's most recent policy meeting April 24-25 that monetary policy is in "more or less the right place" but that policymakers would launch another round of bond purchases if the economy were to weaken.

Pianalto said her forecast is for the world's largest economy to grow at about a 2.5 percent annual growth rate or slightly better this year. Inflation should remain at the Fed's target of 2 percent for the next couple of years, she added.

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The Fed's next policy meeting is June 19-20 and will be followed by a Bernanke news conference.

Economists at major Wall Street firms surveyed after learning that U.S. employers added surprisingly meager 115,000 jobs in April saw about a one in three chance that Fed will start another bond buying initiative.

(Reporting By Mark Felsenthal; Editing by Chizu Nomiyama)