<div><p>ATLANTA (Reuters) - The U.S. economy has entered a recovery and policymakers should now focus on ensuring it is a durable one, a top Federal Reserve official said on Tuesday.</p><p>"Now that growth has resumed, the overall objective of economic policy should be to bring about a durable recovery and an environment that reduces unemployment as quickly as possible while containing inflationary pressures," Atlanta Federal Reserve Bank President Dennis Lockhart said.</p><p>Lockhart, a voter on the Fed's policy-setting Federal Open Market Committee, said achieving this objective will "necessarily involve judicious removal of government supports and the normalization of monetary policy."</p><p>Lockhart, speaking a week after the U.S. central bank reiterated its pledge to keep interest rates ultra-low for an extended period, struck a cautious note on the recovery. The Fed cut overnight interest rates close to zero in December and has held them steady since.</p><p>There are a number of "sobering aspects" of the economic picture, he told a conference sponsored by the Urban Land Institute. However, he said it was possible to envision scenarios in which the Fed had to raise interest rates even with unemployment high.</p><p>The U.S. economy grew at a 3.5 percent annual rate in the third quarter, snapping four down quarters and likely ending the recession that began in December 2007.</p><p>But labor market conditions remain dismal. The unemployment rate surged to a 26-1/2 year high of 10.2 percent in October, and economists expect it to hit 10.5 percent in mid-2010 before subsiding.</p><p>"At this juncture, it's hard to be encouraged about a fast rebound in job growth," Lockhart said.</p><p>The Atlanta Fed chief said he expects the pace of growth to be "relatively subdued" through the medium-term. He cautioned that while there are signs of improvement, data has been "quite mixed" and the recovery has been supported by temporary government programs.</p><p>Lockhart also said policymakers should take into account trends in the ailing commercial real estate sector, as its problems could suppress the pace of the recovery.</p><p>A worry, he said, is the link between bank lending, small business employment and commercial real estate values.</p><p>However, he said he does not think commercial real estate's woes pose a broad risk to the financial system.</p><p>"As the recovery develops, the (commercial real estate) problem will be a headwind, but not a show stopper, in my view," he said.</p><p>In answer to a question, Lockhart said flat or falling consumer incomes also pose a risk to the residential real estate sector, which has appeared to be stabilizing.</p><p>"You could see the development of more stressed personal mortgages," he said.</p><p>(Editing by Dan Grebler)</p><img src="http://admatch-syndication.mochila.com/images/ad.gif?aid=63059476&bid=informcom" /></div><div id="copyright"><div>

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