BEIJING (MNI) – The U.S. Federal Reserve plans to keep monetary
policy accommodative for as long as there are risks facing the domestic
economy, Chicago Fed President and Chief Executive Office Charles Evans
said Wednesday.

Evans told reporters at a briefing here that he is expecting only
“modest” growth this year at 3% to 3.5%, but warned on a host of
problems still facing the economy, including a commercial real estate
stock that is continuing to pressure small- to medium-sized banks.

He also reiterated comments originally delivered in Shanghai on
Tuesday that the recovery would be sluggish as the economy adjusts to
the end of the consumption boom of the last decade.

“American consumers won’t be an engine of growth like they have
been for so many years,” he said.

Nonetheless, he again expressed hope private economic activity will
take up the slack later in the year as the impact of the government’s
fiscal stimulus measures peter out.

Unemployment remains a key challenge, Evans said, forecasting a
fall in the jobless rate this year “but not by much.”

He said that he was in China for meetings with government agencies,
including discussions with the People’s Bank of China on economic
developments.

He told reporters at Tuesday’s Shanghai briefing that the Fed
should keep its accommodative monetary policies stance in place for the
next three or four meetings of its Open Market Committee, though he
wouldn’t be surprising for accommodation to be extended into next year.

Evans was responding to a request at a briefing there to define his
“strongly” held position that “monetary policy is likely to be
accommodative for an extended period of time.”

“That would hold for the next three or four meetings which is about
six months,” he said. “Conditions warrant substantial accommodation
certainly until the end of this year but I would not be surprised if
they extended through to 2011.”

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