PHILADELPHIA - The
Federal Reserve is no less committed to highly accommodative policy now that is
has trimmed its bond-buying stimulus, Ben Bernanke said on Friday in what could
be his last speech as Fed chairman.
Bernanke, who steps down as head of the U.S. central bank at month's end, gave
an upbeat assessment of the U.S. economy in coming quarters. But he tempered
the good news in housing, finance and fiscal policies by repeating that the
overall recovery “clearly remains incomplete” in the U.S.
But that decision “did not indicate any diminution of (the Fed's) commitment to
maintain a highly accommodative monetary policy for as long as needed,” Bernanke
said at a American Economic Association forum in a snow-swept Philadelphia.
"Rather, it reflected the progress we have made toward our goal of
substantial improvement in the labor market outlook that we set out when we
began the current purchase program in September 2012,” he said according to prepared remarks.
To recover from the deep 2007-2009 recession, the Fed has held interest rates
near zero since late 2008. It also has quadrupled the size of its balance sheet
to around $4 trillion through three rounds of massive bond purchases aimed at
holding down longer-term borrowing costs.
"It is possible, however, that some specific aspects of the Federal
Reserve's operating framework will change,” he said.
On the economy, Bernanke noted unemployment remains elevated at 7 percent, and
said the number of long-term unemployed Americans “remains unusually high.”
But “the combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters,” he said. "Of course, if the experience of the past few years teaches us anything, it is that we should be cautious in our forecasts.”
Last month, Bernanke, who is set to be succeeded by Fed Vice Chair Janet
Yellen, said the purchases would likely be cut at a “measured” pace through much
of this year if job gains continued as expected, with the program fully
shuttered by late-2014.