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U.S. Fed chief hints at new monetary steps to boost recovery

04-26-2012 09:06 BJT

WASHINGTON, April 25 (Xinhua) -- U.S. Federal Reserve Chairman Ben Bernanke on Wednesday exuded frustration with the slow labor market recovery and hinted that the central bank was poised to take further moves to boost economic growth.

The U.S. economy has been expanding "moderately" and labor market conditions have improved in recent months. The unemployment rate has declined but remains elevated, said the central bank in a statement after its two-day Federal Open Market Committee (FOMC) meeting that concluded on Wednesday.

U.S. Federal Reserve Chairman Ben Bernanke answers questions during a press conference at
the Federal Reserve building, on April 25, 2012 in Washington D.C. The U.S. Federal
Reserve on Wednesday announced that it will keep the current ultra-loose monetary policy
to sustain economic recovery. (Xinhua/Fang Zhe)

The U.S. unemployment rate remained high at a level of 8.2 percent although it has edged down by about 1 percentage point since last August, and highly accommodative monetary policy is necessary given the backdrop of slow and frustrating labor market recovery, Bernanke said at the fifth press conference after the FOMC meetings.

In a bid to enhance the Fed's transparency and its policy effectiveness, the Fed last year launched the quarterly press conference, the first such effort in the Fed's one-century history.

Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed, noted participants of the FOMC meeting, the powerful interest-rate setting panel. It decided to keep its current ultra-loose monetary policy to sustain economic recovery.

The Fed reaffirmed its policy decision to keep the exceptionally low levels of federal funds rate, currently in the range of 0-0.25 percent, at least through late 2014 to support economic recovery.

Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable. "The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily," said the FOMC.

"Strains in global financial markets continue to pose significant downside risks to the economic outlook," noted the statement.

The Fed remains "entirely prepared" to take further monetary policy steps if the U.S. economic recovery falters, Bernanke told a group of reporters.

The central bank also forecast that U.S. economic growth will remain moderate over the coming quarters and then pick up gradually, while the unemployment rate will decline gradually.

Top policymakers of the central bank on Wednesday upwardly revised its projection of U.S. economic growth this year to a range between 2.4 percent and 2.9 percent from the January forecast between 2.2 percent and 2.7 percent.

The central bank also revised its projection of U.S. economic growth in 2013 to a range between 2.7 percent and 3.1 percent from the January prediction between 2.8 percent and 3.2 percent given the headwinds facing the U.S. economic recovery.

The U.S. economy was confronted with challenges including renewed European financial market stress and the imminent domestic "fiscal cliff," Bernanke added.

Some economists were worried that U.S. tax rate increases and government's spending cuts next year could pose a big threat to the weak economic recovery.

Bernanke stressed that monetary policy was not a silver bullet, and the nation needed fiscal policy support to bolster the ongoing recovery.

Editor:Wang Lingfei |Source: Xinhua

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