(Reuters) – The possibility of a surge in COVID-19 infections is likely to remain a threat to the U.S. economy until a vaccine is developed, and a full recovery is still far off, Kansas City Federal Reserve Bank President Esther George said Thursday.

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The shutdowns enacted to control the virus disproportionately hit hospitality, education, health and retail, and it will take a while for the economy to recover fully, George said in remarks prepared for a virtual event organized by the Economic Club of Kansas City.

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“While we saw strong job gains in these industries in May, with employment increasing by 2 million jobs, a full recovery is still far off,” she said.

The Fed’s efforts to boost market liquidity and improve market functioning through asset purchases and a slate of emergency lending facilities seem to have worked, George said. But economic activity may not fully rebound, and the possibility of a new surge of infections is likely to remain a “persistent risk” until a vaccine is developed, she cautioned.

State and local governments, in particular, are struggling to balance their budgets after the pandemic led to a sharp drop in tax revenues, she said.

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Given the uncertainty over the outlook, it will be difficult for policymakers to determine the correct path for monetary policy, George said.

“Overall, it might be a while before the dust settles and we gain insight on whether further accommodation is necessary or not,” she said.

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