Were you feeling optimistic that December and January marked the biggest two-month drop in joblessness since 1958? Well don’t. Speaking to the House Budgetary Committee today, Federal Reserve Chairman Ben Bernanke said, “With output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level,” adding, caution should also be applied to the chance your boyfriend will remember it’s Valentine’s Day. If pickup remains shaky and fears of deflation persist, Bernanke will push forward with plans to buy $600 billion in Treasury securities to boost the pace of recovery. Last November, the central bank already announced a second round of asset purchases to speed up the pace.
But Republicans on the panel express their own note of caution about the Fed’s treasury purchases, claiming they “risk asset-price bubbles and faster inflation.” Scott Garrett, a GOP representative from New Jersey, went as far as asking Bernanke to reconcile his position that the Fed can help home prices now when Bernanke claimed that the Fed’s monetary policy didn’t fuel the last decade’s housing bubble. In response, Bernanke said the bubble was “far greater than could be explained” by the Fed’s interest-rate actions and that home prices are not “responding at all” to the Fed’s current policy. Well, that explains his Charlie Brown face.
Bernanke Says Unemployment to `Remain Elevated’ [Bloomberg]