Federal Reserve Chairman Ben S. Bernanke said the economy has shown signs of improvement while remaining vulnerable to shocks, and he called on lawmakers to reduce the long-term U.S. budget deficit.
“Fortunately, over the past few months, indicators of spending, production, and job-market activity have shown some signs of improvement,” Bernanke said today in testimony to the House Budget Committee in Washington. “The outlook remains uncertain, however, and close monitoring of economic developments will remain necessary.”
Bernanke repeated the Federal Open Market Committee’s Jan. 25 statement that the outlook for the economy would likely warrant near-zero interest rates through at least late 2014. The FOMC also established an inflation goal of 2 percent, achieving Bernanke’s longstanding aim to reduce “public uncertainty” about monetary policy.
“In an environment of well-anchored inflation expectations, more-stable commodity prices, and substantial slack in labor and product markets, we expect inflation to remain subdued,” Bernanke said today.
The Standard & Poor’s 500 Index fell 0.2 percent to 1,321.94 at 12:42 p.m. in New York. The yield on the 10-year Treasury note was 1.82 percent, down one basis point from yesterday.
During questioning after his opening statement, Bernanke rejected criticism from Republican Representative Paul Ryan of Wisconsin, chairman of the budget committee, who said the Fed was willing to tolerate inflation above its target in order to bring down unemployment.
“We will not actively seek to raise inflation or to move away from the target,” Bernanke said. “We’re always trying to bring inflation back to the target.”
Source: Bloomberg | Joshua Zumbrun