The economic forecast for 2008 has weakened in the past six months and downside risks rose, leading Federal Reserve Bank of Richmond president Jeffrey M. Lacker to remark yesterday that a mild recession is possible, but if there are no surprises, the Fed could be done with rate cuts.

“Clearly, economic activity has been softening,” Lacker said in prepared remarks before the West Virginia Banker’s Association released by the Fed. “I can also see the possibility of a mild recession, similar to the last two we have experienced — in other words, shallow and with a slow recovery. What I don’t expect is a more severe recession, like those we saw in 1982 or 1974.”

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