Bernanke Says a Lot, But Little New, at Press Conference

FOXBusiness

Federal Reserve Chairman Ben Bernanke covered a lot of ground in his second official press conference, but said little new.

Investors apparently heard something, though, because as Bernanke was speaking the stock markets tumbled into negative territory for the first time all day.

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Most significantly, perhaps, he reiterated in person the view of his fellow Federal Open Market Committee members that the recovery has hit a snag and that earlier Fed forecasts have been revised lower for the rest of 2011.

For that reason, the Fed wont be raising interest rates for an extended period, a phrase Bernanke refused to quantify when asked by a reporter.

Bernanke maintained his often-expressed position that the glitch in the recovery is likely temporary, brought on by higher fuel costs due to political turmoil in the Middle East and supply chain disruptions in the wake of the Japanese earthquake and tsunami in March.

Bernanke emphasized that gas prices appear to be moderating and the impact from the Japanese natural disaster dissipating.

He noted that the Fed did not change its forecasts for 2013.

The unemployment rate will continue to decline, he said, but the pace of progress remains 'frustratingly slow.'

The Feds critics have argued that inflation is on the rise largely due to the Feds loose fiscal policies, including low interest rates and the purchase of about $2.3 trillion in government securities.

In response to questions from reporters, Bernanke didnt rule out any new stimulus programs, but said the Fed would evaluate new policies as new economic data arrived.

However, he said the current economic situation is much improved from last August, when the Fed approved a second round of securities purchases valued at $600 billion, a policy of quantitative easing thats come to be known as QE2. Bernanke said quantitative easing has been very successful in containing deflation.

And he refused to pin the Fed down to a timeline on when it might begin raising interest rates and whether that increase would be sharp or gradual.

We dont want to commit ourselves to a fixed timeframe, Bernanke said.

He attempted to put the debt crisis in Greece into a larger perspective, describing it as one of several risks facing the U.S.

Bernanke also warned against sharp and sudden cuts in government spending to reduce the U.S. budget deficit, while at the same time emphasizing the need for the U.S. to get its fiscal house in order.

Cutting the deficit is not an automatic recipe for creating jobs, he said.

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