WASHINGTON –Federal Reserve Chairman
Ben Bernanke said a weak job market and low inflation would likely allow the central
bank to keep interest rates at very low levels for “an extended
In his first appearance before
Congress following a testy confirmation vote in the Senate last month, Bernanke
offered a relatively sombre assessment of the U.S. economy despite recent signs
of strong growth.
The country has lost 8.4 million
jobs since the economy in December 2007 dropped into its deepest downturn since
the Great Depression. The Fed chief said job losses were abating, but also
acknowledged the recession’s toll on American workers.
“Notwithstanding the positive
signs, the job market remains quite weak,” Bernanke said in testimony
prepared for delivery to the U.S. House of Representatives Financial Services
Bernanke told lawmakers that the
U.S. central bank’s policy-setting Federal Open Market Committee stood prepared
to continue supporting the economy with extraordinary stimulus for some time.
“The FOMC continues to
anticipate that economic conditions — including low rates of resource utilization,
subdued inflation trends, and stable inflation expectations — are likely to
warrant exceptionally low levels of the federal funds rate for an extended period,”
he said, echoing the Fed’s most recent policy statement in late January.
Most analysts do not expect the Fed
to raise the benchmark federal funds rate until sometime in the second half of
the year, at the earliest. Similarly, a Reuters poll released on Wednesday
showed economists expect the European Central Bank to keep euro zone interest
rates on hold until the fourth quarter.
While the Fed and ECB appear to be
heading toward a tightening, the situation is less clear in Britain. Bank of
England policy-maker Adam Posen told Reuters Insider that the BoE would expand
its quantitative easing programme “if we have to.”