The Federal Reserve’s monetary stimulus is helping the US economy recover, and the central bank needs to see further signs of traction before taking its foot off the gas, central bank chairman Ben Bernanke said today.
In testimony that offered no sign that he is ready to retreat from the Fed’s latest round of bond buying, Bernanke emphasized the high costs of unemployment and inflation that continues to run below the central bank’s target.
«Monetary policy is providing significant benefits,» Bernanke said in remarks prepared for delivery to the Joint Economic Committee of the U.S. Congress, citing strong consumer spending on autos and housing, as well as increases in household wealth.
«Monetary policy has also helped offset incipient deflationary pressures and kept inflation from falling even further below the (Fed’s) 2 percent longer-run objective.»
He said part of the reason for low inflation was a decline in energy prices. But there were also indications of more broad-based disinflation, Bernanke said.
«Price inflation for other consumer goods and services has also been subdued,» he said.
Bernanke reiterated that the Fed was prepared to either increase or reduce the pace of its bond buys depending on economic conditions, as the central bank stated on May 1 after its last policy meeting.
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