Warning of Economic Distress, Bernanke Says Fed Will Do Nothing Yet
Today and tomorrow, Ben Bernanke, the chairman of the Federal Reserve, is delivering his twice-yearly Monetary Policy Report to Congress and taking questions — today from the Senate Banking Committee, tomorrow from the House Financial Services Committee.
Bernanke’s prepared testimony is more cautious than his last, given in February. He says it will take “a significant amount of time” to restore the millions of jobs lost in the recession, and says “the economic outlook remains unusually uncertain.” He nevertheless says that the recovery is “proceeding at a moderate pace,” though job growth is still “insufficient to reduce the unemployment rate materially” and joblessness in general remains an “important drag on household spending.” He noted that since February, the Federal Reserve has revised down its estimates of job growth and believes unemployment will remain high for longer than thought, also noting the troubling plight of the long-term unemployed.
Despite his warnings on the state of economy, Bernanke said the Fed will not engage in any expansionary policy at the time: “We will continue to carefully assess ongoing financial and economic developments, and we remain prepared to take further policy actions as needed to foster a return to full utilization of our nation’s productive potential in a context of price stability.”
Other economists are calling on the Federal Reserve to be more proactive in ginning up the economy and reducing joblessness.