Federal Reserve Chairman Ben S. Bernanke said the “frustratingly slow” U.S. recovery warrants sustained monetary stimulus while predicting that growth will gain speed in the second half of the year.
“The economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed,” Bernanke said yesterday in a speech in Atlanta. At the same time, the Fed “will take whatever actions are necessary to keep inflation well controlled,” he said.
Bernanke said consumer spending is being held back by an unemployment rate that rose to 9.1 percent last month, a drop in home values and tight credit. Growth is likely to pick up as fuel prices moderate and factory disruptions ease as factories in Japan recover from an earthquake and tsunami, he said. Stocks and bonds fell as some investors interpreted the comments as a signal that the Fed is unlikely to deploy a new round of bond purchases to bolster the economy.