Bernanke Forecasts Long Period of Low Interest Rates
WASHINGTON — Ben S. Bernanke, making his first appearance before Congress since the Senate confirmed him last month to a second term as chairman of the Federal Reserve, reaffirmed on Wednesday that short-term interest rates would remain exceptionally low — near zero — for “an extended period.”
In presenting the Fed’s semiannual monetary report to Congress, Mr. Bernanke did not waver from the Jan. 27 statement of the central bank’s key policy making board, or from a Feb. 10 statement in which he explained to Congress the strategies for gradually reducing the vast sums that banks hold in reserves at the Fed.
“Although the federal funds rate is likely to remain exceptionally low for an extended period, as the expansion matures, the Federal Reserve will at some point need to begin to tighten monetary conditions to prevent the development of inflationary pressures,” Mr. Bernanke said in a prepared statement.Mr. Bernanke predicted that the economic recovery would remain slow. Much of the pickup in growth late last year, he said, could be attributed to companies reducing unwanted inventories of unsold goods, making them more willing to bolster production.