The moderate pace of the economic recovery is understandable given the financial crisis, said Jeffrey Lacker, the president of the Richmond Federal Reserve Bank, on Wednesday. Lacker said the reasons for more moderate growth suggest further Fed easing is not likely to be of much help. In a speech to a business group in Norfolk, Va., Lacker said there is a "lingering depression" in the new home construction business that could last for several more years. While there are some bright spots in housing, residential investment is now only 2.25% of gross domestic product, compared to over 6% at the peak. Lacker repeated his view that the Fed should only purchase more assets, a policy commonly called quantitative easing, if there is "a dramatic deterioration" in the economy. Additional easing is unlikely to have much effect and could well generate a sustained surge of inflation, he said.

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