The US economy is in ??uncharted waters,? Federal Reserve vice-chairman Don Kohn said on Tuesday, warning that both financial and economic recovery was likely to be slow.
While financial markets have ??improved somewhat? there were still many signs of stress. Markets were unlikely to normalise quickly because of the extent of the structural changes that would have to take place, he argued. Those processes ??are likely to be slow and they may be set back from time to time?.
Mr Kohn said growth would probably firm from the second half of the year onwards. But ??a number of factors suggest that the recovery could be relatively moderate?.
The full impact of past Fed rate cuts would only be felt gradually as market strains eased. Demand for housing was ??not likely to rebound substantially for a while?.
