WASHINGTON — Rock-bottom interest rates are still needed to aid the economic recovery, but there’s a chance that the Federal Reserve may have to start raising rates before the nation’s unemployment rate drops significantly, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said Wednesday.

After suffering from the worst and longest recession since the 1930s, the economy seems to be on a path for moderate growth, a little below a 3 percent pace for the January-to-March quarter, Lockhart said in a speech in Hartford, Conn.

The unemployment rate now stands at 9.7 percent. The Fed, along with many private economists, predict the jobless rate will stay high over the next two years because economic growth won’t be robust enough to drive it down quickly.

Treasury Secretary Timothy Geithner, meanwhile, took the Obama administration’s message on overhauling financial regulation and aiding small businesses to the industrial heartland. On a visit to Pittsburgh, Geithner said the economy “is gradually, but definitely, getting stronger.”

“We need to do more now to help businesses expand investment and put people back to work,” he said in an address at the United Steelworkers union’s headquarters. “This is still a very tough economy.”

What’s needed, Geither said, are new tax cuts and credit programs from Congress for small businesses, a rebuilt national infrastructure, expanded exports, and aid to cities and states to keep public employees working.

Economists estimate that employers added around 190,000 jobs in March, in what they hope will be the start of consistent payroll gains. If they are right, it would mark the biggest jobs gain in three years and only the second month since the recession started in December 2007 that the economy actually added jobs.

The government releases its employment report on Friday. Analysts think the jobless rate will stay at 9.7 percent for the third straight month.

Lockhart indicated that the Fed shouldn’t keep holding rates at low levels until the unemployment rate drops to where it was before the recession — around 4.5 percent, a rate that many analysts believe is better than normal.

 

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