Bernanke Hints That The Economy Still Needs Help
In the nearly impenetrable language that comes with his job, Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that even though the economy is doing better, the central bank needs to keep giving it a boost.
The key passage from his prepared testimony:
"Recognizing the drawbacks of persistently low rates, the FOMC actively seeks economic conditions consistent with sustainably higher interest rates. Unfortunately, withdrawing policy accommodation at this juncture would be highly unlikely to produce such conditions. A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further. Such outcomes tend to be associated with extended periods of lower, not higher, interest rates, as well as poor returns on other assets. Moreover, renewed economic weakness would pose its own risks to financial stability."