Wed November 2, 2011
Bernanke: Pace Of Progress 'Likely To Be Frustratingly Slow'
In a press conference following a two-day meeting of the Federal Open Market Committee, Federal Reserve Chairman Ben Bernanke painted a mixed picture of the economy.
The bottom line, he said is that "the pace of progress is likely to be frustratingly slow."
In his opening statement, Bernanke echoed what the Fed said in its statement, earlier. He said the Fed expects moderate growth in the economy and expects unemployment to stay high. Here are some highlights from Bernanke's third press conference:
-- Japan is recovering from the tsunami; prices of oil are down and those two things bode well for the U.S. economy.
-- Housing, credit and the financial markets are still weighing down the economy.
-- The Fed will continue its "highly accommodative stance" on monetary policy.
-- The unemployment rate will stay stubbornly high. Even in 2014, the Fed expects it to be above normal.
-- On criticism from Republican presidential candidates that Fed policy is risking inflation, Bernanke said over the past few years inflation has been 2 percent, so that criticism has "not proved valid."
-- Bernanke also said the Fed should answer to Congress in the long run, but in the "short term it's important to make our decisions clear from politics."
-- Bernanke said he understood and "sympathized" with the Occupy Wall Street movement but he said concerns "about the Fed are misplaced." He said Fed's bailouts were not intended to keep bankers rich but to "protect the financial systems."
-- On the subject of income inequality, he said the only thing the Fed can do to address something he said has been mounting for 30 years is to create jobs.
-- Bernanke said the ultimate goal of the Fed is to return to an all-Treasury portfolio, but for now, because the housing market is such a big part of the instability of the economy, the Fed may continue investing in mortgage-backed securities.
-- The chairman was asked if the outlook of the U.S. economy was so gloomy, why would the Fed wait to enact more monetary policy. Bernanke said the Fed has been very aggressive. He said what the Fed has are projections, so "it's important to see what happens." One thing economists have said over the past few months, is that the Fed is running out of economic tools. But Bernanke ruled that out, saying the Fed still has a "broad range of policies" to stimulate the economy.
However, he called on the political arm of the United States to help the Fed.
"I hope there will be a broad range of actions that complements" Fed policy, he said.
-- On Europe's sovereign debt crisis, Bernanke said their woes have been drag on a U.S. recovery, but it's up to Europe's leaders to make the decisions.