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Ben Bernanke: Faster economic growth needed in US

Fed chairman says he'll press the agency to continue or expand its easy-money policies to further cut jobless rate.

Clone of Ben bernanke capitol hill 2011 10 04Enlarge
Federal Reserve Chairman Ben Bernanke testifies before the Joint Economic Committee on Capitol Hill in Washington, D.C., Oct. 4, 2011. (JIM WATSON/AFP/Getty Images/Getty Images)

Despite three months of job gains, faster economic growth is needed to bring the US unemployment rate down further, Federal Reserve Chairman Ben Bernanke said Monday.

Further job gains will likely require more robust consumer and business demand, Bernanke said during a speech at the National Association for Business Economics spring conference in Arlington, Va., The Associated Press reported.

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Bernanke's comments suggest the central bank is prepared to keep interest rates near zero for some time, according to the AP.

He said the recent decline in the jobless rate, which dropped to 8.3 percent in February from 9.1 percent last summer, was "somewhat out of sync" with the rather modest pace of economic growth, Reuters reported.

"To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke said.

Bernanke offered one possible explanation for the disconnect.

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He said employers may be hiring rapidly because they cut too many jobs during the recession, adding government revisions may later show stronger growth over the past year, the Los Angeles Times reported.

Bernanke's comments offer insight into the reasoning behind the Fed's plan to hold short-term interest rates near zero through 2014. The central bank has stuck with that timetable despite three months of strong job growth and other signs of economic improvement, according to the AP.

"Bernanke made clear that the slack in the labor market is sufficient to sideline the inflation issue for the moment,"  Diane Swonk, chief economist at Mesirow Financial in Chicago, told the Times. "Ben will continue to resist and override dissenters in his own ranks to keep and perhaps even expand monetary policy accommodation."

http://www.globalpost.com/dispatch/news/regions/americas/united-states/120326/ben-bernanke-faster-economic-growth-needed