WILMINGTON, N.C., Feb. 26 (UPI) -- Vice Chairman of the U.S. Federal Reserve Donald L. Kohn ended a speech Tuesday saying, "We have the tools … we will do what is needed" to ease the recovery.
Speaking at the University of North Carolina at Wilmington, Cameron School of Business, Kohn projected "the recovery in financial markets is likely to be a prolonged process." He added, the length of the recovery would depend on developments in the housing market.
"If the deterioration in the housing market were greater than expected in coming months, the losses borne by financial institutions" would lead to "reduced credit availability," he said.
Kohn said inflation of food and energy prices was pushed, in part, by "strong demand from rapidly growing emerging market-economies, like China and India."
But, "I can still see a few bright spots," he said, indicating that business inventories "do not appear worrisome at present" and "international trade continued to be a solid source of support for the economy through the end of last year."
Before his final note which indicated the Fed has not ruled out more interest rate cuts, Kohn said recovery would "probably take a little while," but "adverse risks to this mostly likely scenario abound."
