Fed's Pianalto: Economy showing cyclical weakness (by Greg Robb)

WASHINGTON (MarketWatch) - The U.S. economy is being held down by lack of demand and not structural factors, said Sandra Pianalto, the president of the Cleveland Federal Reserve Bank, on Thursday. "My current assessment is that the real economy continues to show considerable cyclical weakness. This assessment, along with my outlook for moderate growth and subdued inflation, calls for today's highly accommodative monetary policy," Pianalto said in a speech at a conference sponsored by the National Association of Business Economics in Cleveland. Pianalto forecast growth slightly above a 2.5% rate this year and around 3.0% in 2013 and 2014. "At this pace of growth, I expect that it could take as long as four to five years for the unemployment rate to fall to the 6% rate," Pianalto said. Inflation should run very close to the Fed's target of 2% through 2014, she added.