US Federal Reserve Chairman Ben Bernanke reiterated Wednesday that its stimulus could be wound up next year if economic growth remains steady as forecast.
But Bernanke warned that government spending cuts continue to threaten growth and that tapering the bond-purchase program is "by no means" a "preset course".
In prepared testimony to Congress, Bernanke stressed that the end to the $85 billion-a-month program, known as quantitative easing (QE), program did not mean the Fed was ready to begin tightening monetary policy with interest-rate hikes.
With unemployment still high and falling slowly and inflation very low, he said, "a highly accommodative monetary policy will remain appropriate for the foreseeable future."
Bernanke repeated the path for the QE program that he laid out after the last policy meeting of the Federal Open Market Committee in June: that the Fed could begin cutting the bond investments later this year and wind up the program entirely by the middle of next year, if the economy grows as the FOMC members expect.
But, addressing the jump in bond yields that answered that plan, he doubled up his message that the stimulus taper did not mean the Fed was ready to tighten its ultra-low interest rates.
And he stressed that growth remained vulnerable, and that QE would remain in place if needed, or even expanded.
"I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course."