Bernanke Discusses Unemployment, Defends QE2 in Speech Today
Federal Reserve Chairman Ben Bernanke defended his decision to go through with QE2 today, stating that the unemployment rate is likely to remain elevated "for some time." In his speech before the House Budget Committee, Bernanke said that with "moderate" output growth and employers "still reluctant to add to their payrolls," it will be "several years" before the jobless rate moves to a "more normal level." Much of the Fed Chairman's commentary was similar to his February 4 report to the U.S. Senate, although he did not repeat his statement from the prior hearing that the job market could take "four to five more years" to normalize.
In discussing the Fed's current monetary stance, Bernanke defended the "QE2" bond purchasing program and said that it has supported job creation and economic growth. He stated that the December-January jobless decline is "grounds for optimism" and that QE2 may help to create about 3 million jobs. As for prices, Bernanke says that inflation is likely to persist below Fed-mandated level and the central bank remains 'unwaveringly committed to price stability.'
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