LOS ANGELES -- Robert Parry, president of the Federal Reserve Bank of San Francisco, said another easing by the Federal Reserve could not be ruled out given recent slow economic growth and expectations of continued sluggishness.

But while the Fed will do what it can to sustain a recovery, it also will be careful to "preserve and advance hard-won gains against inflation," Mr. Parry said in a speech to a business group last week.

Slow Growth

Mr. Parry noted that second-quarter gross domestic product grew only 1.5% and said partial data suggest the third quarter was also very slow.

Despite the delayed response to the Fed's stimulation moves, Mr. Parry cited the rebound in August housing starts as encouraging news.

But he noted that cutbacks in government spending, particularly in defense, as well as rises in imports and commercial real estate problems are restraining U.S. economic growth.

Commercial real estate, he said, cannot be counted on as in the past to pull the economy out of recession.

Looking abroad, Mr. Parry said easier money in some European Community countries should help cushion economic declines.

However, "the policy actions taken so far don't seem to be big enough to offset fully the weakening trends in their economies," he said.

"This is not good news for U.S. exports."

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