THE CHAIRMAN of the Federal Reserve has predicted that a “moderate economic recovery” would unfold in the US over the next several quarters on the back of stronger spending by businesses and consumers.
In testimony before the joint economic committee in Congress yesterday, which coincided with the release of unexpectedly strong retail sales data for March, Ben Bernanke offered a slightly more upbeat outlook than he had previously.
“It looks like we’re on a path to moderate recovery and that the risk of a double-dip [recession], while certainly not negligible, is certainly less than it was a few months ago,” he said. “That being said, there are any number of possible things that could derail it.”
In fact, Mr Bernanke warned that “significant restraints” remained in the US economy, including persistently high unemployment, weakness in the housing market and the dire budgetary conditions of state and local governments.
In response to a question from Carolyn Maloney, the Democratic chairwoman of the committee, Mr Bernanke reiterated the Federal Open Market Committee’s latest statement in March saying that it would keep interest rates at “exceptionally low” levels for an “extended period” in order to spur the recovery.
Mr Bernanke however cautioned that the Fed’s monetary policy stance depended on the pace of the recovery and that the US central bank would “respond” to any changes in the outlook. – Copyright The Financial Times Limited 2010
