Monetary policy "still has a big job to do," and the Fed needs "to be cautious in our expansion of asset purchases," Federal Reserve Bank of Cleveland President and CEO Sandra Pianalto said Tuesday.

"In this environment, it should be clear that monetary policy still has a big job to do, and we are committed to pursuing our long-run objectives of maximum employment and stable prices by holding interest rates low until we are closer to these objectives," Pianalto told the Economic Club of Pittsburgh and CFA Society Pittsburgh, according to prepared text released by the Fed. "Meanwhile, the Federal Reserve's substantial holdings of securities will continue to apply downward pressure to longer-term interest rates. These lower interest rates should add support to the economy until we are closer to the FOMC's dual mandate objectives. Even when we ease up on the rate of new asset purchases, we will still be some distance from beginning to increase short-term rates."

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