Bernanke Says Too Soon to Declare Victory on Recovery
Federal Reserve Chairman Ben Bernanke said on Tuesday it is too soon to declare victory on the U.S. economy, warning against complacency in policymaking as the outlook brightens.
"We haven't quite yet got to the point where we can be completely confident that we're on a track to full recovery," Bernanke told ABC News in a rare on-the-record interview.
The Fed chairman welcomed a decline in the unemployment rate and signs that financial strains in debt-stricken Europe were easing. But he said joblessness was still at a troubling high and housing markets still weak.
"I think it's really important not to be complacent. We have a long way to go, a lot of work to do, and we're going to keep doing that."
Asked whether the Fed was considering further action to stimulate growth, Bernanke said the central bank would take no options off the table. However, he did not suggest a further round of bond buying was imminent.
The Fed has kept interest rates near zero since December 2008 and has bought $2.3 trillion of debt through two bond-purchasing programs to stimulate growth.
In a speech on Monday, Bernanke said the U.S. economy would need to grow more quickly to ensure continued progress in reducing the jobless rate. Those comments drove stock prices higher as investors bet that a further round of monetary stimulus might be planned.
Stocks rose Monday on optimism Bernanke's remarks signaled the Fed will do more to lower borrowing costs, and traders pushed out bets for a first Fed rate hike to October 2013, from July 2013 just a week earlier.
The U.S. unemployment rate has dropped from 9.1 percent in August to 8.3 percent last month, a decline Fed officials see as out of step with a still-sluggish pace of growth.
Dallas Federal Reserve Bank President Richard Fisher, a monetary policy hawk, o n T uesday agreed that faster growth is needed to boost jobs, although he made clear he is opposed to a further easing of monetary policy.
Eric Rosengren, a policy dove who leads the Boston Fed, said the central bank should ease further if growth slows more than expected. Neither official has a vote this year on Fed's policy panel.
After its last two meetings, the Fed said it would likely keep overnight borrowing costs near zero at least through late 2014. Bernanke said that was the central bank's best estimate, not a guarantee.
A quickened pace of job creation - the economy has created more than 200,000 jobs in each of the last three months - has fueled speculation the central bank might raise rates sooner.
In both his speech on Monday and in the interview on Tuesday, Bernanke appeared to be pushing back against those expectations.
"It's far too early to declare victory," Bernanke told ABC News. "We need to be cautious and make sure this is sustainable."