The economy still has a long way to go, Federal Reserve Chairman Ben Bernanke
said Monday.Bernanke continue to assert that the Fed intends to hold short-term interest rates near zero through 2014, which will help keep mortgage rates low. He also said the Fed has
been investing in government debt that will possibly reduce long-term interest
rates even more.
With the economy showing some signs of improvement — including a drop in the jobless
rate to 8.3 percent in February (compared to 9.1 percent last summer) — many
investors had assumed the Fed would reverse course and announce a raise in
interest rates starting in July 2013.
But Bernanke stood firm Monday on the Fed’s vow to keep key rates low until 2014.
Bernanke cited continued concerns over long-term unemployment.
“Recent improvements are encouraging,” Bernanke said. However, “millions of families
continue to suffer the day-to-day hardships associated with not being able to
find suitable employment.”
Unemployment particularly remains high for those who have been unable to find a job for six
months or more. Research has shown those who are out of work for an extended
period of time are more likely to see permanent declines in wealth, health, and
earnings potential.
Source: “Bernanke Says Faster Growth Is Needed to Bolster Job Market,” The New York Times (March 26, 2012) and “Bernanke: U.S. Needs Faster Growth to Lower Unemployment,” Reuters News (March 26, 2012)