Resource use that is “quite low,” subdued inflation, and credit restraints that will likely “constrain the speed of recovery” combine to make it likely the Fed will keep rates low for “an extended period,” Federal Reserve Board vice chairman Donald L. Kohn told the Cato Institute’s Shadow Open Market Committee yesterday.

“Although economic conditions have apparently begun to improve — partly in response to the extraordinary steps the Federal Reserve and other authorities have taken — resource utilization is quite low, inflation is subdued, and continuing restraints on credit are likely to constrain the speed of recovery,” Kohn said, according to a prepared text of his remarks released by the Fed.

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