March 27, 2013 / 7:26 PM / 5 years ago

Europe limited drag on U.S. growth - Fed's Kocherlakota

EDINA, Minn., March 27 (Reuters) - European demand for U.S. goods will remain low for the next year or more, but likely make a limited impact on the United States economy and its financial institutions, Minneapolis Fed President Narayana Kocherlakota said on Wednesday.

Kocherlakota, speaking to reporters after a speech in a suburb of Minneapolis, said that U.S. trade with Europe is relatively small relative to its economy overall.

“Europe is struggling right now so that kind of source in demand is remaining low and it is going to remain low, I think, over the next year or so,” Kocherlakota told reporters after a speech in a suburb of Minneapolis.

“From the U.S. perspective, fortunately, that is a limited drag on our growth,” he said.

Kocherlakota said the Fed worries more about the possibility that uncertainties in European financial markets could arise and spill over into the United States.

However, recent stress tests of large U.S. banks should leave Americans with comfort about their resilience “in the face of very extreme kinds of shocks,” he said.

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