Federal Reserve policymakers must be flexible in responding to the economy and its risks, according to Federal Reserve Bank of Cleveland president Sandra Pianalto.

“Our economy is confronting a number of challenges as the new year begins,” Pianalto told the Association for Corporate Growth, according to prepared text of her speech, released by the Fed. “The residential real estate market still appears to be in freefall. In addition, oil prices have risen, and housing and equity prices have fallen. These factors are restraining the economy beyond the housing sector.”

“The economic and financial environment has been very fluid lately, creating the need to be highly flexible in responding to changes to the outlook and associated risks,” she added.

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