Bernanke confident over growth and inflation

Things are getting better, but we’ve a long way to go.

That was the message from the Federal Reserve Chairman Ben Bernanke who has been trying to reassure Americans that the outlook for the world’s largest economy appears to be improving.

Bernanke, in his twice-yearly report on monetary policy to the Financial Services Committee of the lower house of Congress, said interest rates are likely to remain close to zero for some time yet, but he and his advisers are already thinking about an exit strategy:

“We also believe that it is important to assure the public and the markets that the extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation.”

The US central bank chief was responding to the fears of some economists and policy-makers, that with essentially more dollars being printed to stimulate the economy inflation could explode as the recovery gains traction.

Bernanke warned the housing and labour markets are still not recovering and unemployment will likely remain high into 2011 which could sap fragile consumer confidence and undermine what is expected to be a very gradual recovery.

Copyright © 2009 euronews

tags: Federal Reserve, Inflation