The head U.S.banker flung the doors of the normally secretive Federal Reserve wide open Wednesday to hold the first of three planned news conferences. Fed chief Ben Bernanke fielded questions on a number of economic issues, including record low interest rates and the nation’s high unemployment.
In his first ever news conference, Federal Reserve Chairman Ben Bernanke said the U.S. economy is recovering at a moderate pace. He also announced that the Fed’s controversial $600-billion bond-buying program would end in June as planned.
“Of course, going forward the committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to meet the Federal Reserve’s mandate,” said Bernanke.
The bond purchases were intended to bolster the U.S. economy by lowering loan rates and encouraging banks to lend more money. But critics worried the purchases would feed inflation and lower the value of the dollar. Bernanke downplayed inflation risks but acknowledged that the recent spike in gasoline prices is hurting consumers.
“Our view is that gas prices will not continue to rise at the recent pace and as they stabilize or even come down if the situation stabilizes in the Middle East, that that will provide some relief on the inflation front. But we’ll have to watch it carefully,” he said.
The Fed also kept a pledge to hold its key interest rates at record lows for an extended period. Higher rates would reduce borrowing and dampen consumer spending, but it would also make companies less inclined to boost prices.
Economists say as long as unemployment remains high, the recovery is likely to stay muted. But Bernanke says he’s optimistic.
“While the recovery process looks likely to continue to be a relatively moderate one compared to the depth of the recession, I do think that the pace will pick up over time and I am very confident in the long run that the U.S. will return to being the most productive, one of the fastest growing and dynamic economies in the world,” said Bernanke.
In the past, policy decisions made by the Federal Reserve’s board members were often shrouded in secrecy or announced weeks later. Some analysts see the Fed decision to answer reporter questions directly as a bold move that will allow the nation’s top economist to steer discussion on the U.S. economy.