Federal Reserve Governor Elizabeth Duke said Friday there was a "lot of slack" in the U.S. economy and the government still needs to support recovery.

In response to questions from the Maryland Bankers Association, Duke said that with unemployment hovering in the 9.5 percent range, the recovery needed continued support.

"My view would be that we need to have a credible plan for reducing the debt and the deficits over the long run, but not in the immediate time frame. In the immediate time frame, we still need to support a recovery that's just getting started," she said.

Duke added, however, that it was important for Congress to begin the discussion of how it will start to reduce deficits.

Duke, a former community banker, said there was nothing in the regulations to implement the Dodd-Frank financial reform legislation that would "kill" the business model for community banks.