Federal Reserve Chairman Ben S. Bernanke said the central bank is concentrating “intently” on reducing unemployment and projects inflation to stay under control for the “foreseeable future.”
“For a lot of people, I know, it doesn’t feel like the recession ever ended,” even with the economy growing for two years, Bernanke said today in prepared remarks for a town hall-style meeting with soldiers at Fort Bliss in El Paso, Texas.
The event is part of Bernanke’s effort to explain to Americans his rationale for the central bank’s unprecedented bailouts of financial firms and efforts to spur economic growth. Bernanke and his colleagues are struggling to reduce unemployment stuck near 9 percent or higher for more than two years after lowering interest rates almost to zero and using unconventional tools to ease credit.
Joblessness is “painfully high,” with more than two-fifths of unemployed people out of work for longer than six months, “by far the highest ratio since World War II,” Bernanke said in comments before taking questions. “These problems are very serious, and we at the Federal Reserve have been focusing intently on supporting job creation.”
The Fed chief reinforced points made in his press conference last week, saying today that “inflation appears to be moderating” after “spikes in oil and food prices” helped accelerate price increases earlier this year.
“We expect, based on the best information that we have today, that it will remain reasonably close to our objective of 2 percent or a bit less for the foreseeable future,” Bernanke said.
Last week, Bernanke signaled additional monetary stimulus may be needed to lower U.S. joblessness, saying potential actions including a third round of securities purchases are “on the table.” He warned in a Nov. 2 press conference that economic improvement will probably be “frustratingly slow,” with policy makers forecasting a 1 percentage-point drop in the jobless rate to about 8 percent over two years.
The Fed is trying to keep borrowing costs low to support consumer purchases of homes and cars and business investment in equipment, software and facilities, Bernanke said today. The central bank will return a “substantial” amount of earnings on its securities holdings to the U.S. Treasury Department this year after $125 billion of payments in the last two years helped reduce the federal budget deficit, he said.
Bernanke reiterated his view that the Fed “was never intended to shoulder the entire burden of promoting economic prosperity,” calling on other economic policy makers to help through spending and tax policy as well as labor, housing, trade and regulatory efforts.
The public’s view of Bernanke, 57, has declined in recent months, according to Bloomberg polls. Twenty-nine percent said in September they have a favorable view of the central banker against 35 percent who have an unfavorable view. That compares with the June poll, when 30 percent had a favorable view, and 26 percent had an unfavorable view.
Bernanke has also drawn fire from Republican presidential candidates, with former Massachusetts Governor Mitt Romney, businessman Herman Cain, Texas Governor Rick Perry, former Speaker of the House Newt Gingrich and Congressman Ron Paul all indicating they’d appoint a new Fed chair if they won the presidency in 2012. Bernanke’s term as Fed chief ends in January of 2014.
Since mid-2009 the Fed chief has also held a town hall-style discussion on PBS television and met with students and business executives for question-and-answer sessions. He began in April holding televised press conferences.
“You may be wondering why the chairman of the Federal Reserve would travel to Texas to speak at a military base,” Bernanke said today. He said he meets with a “wide range” of groups to listen, learn and explain the Fed’s actions. “I’m here because the men and women in military service, like all Americans, are profoundly affected by the economic challenges our nation has faced these past several years.”
Bernanke’s visit took place one day before Veterans Day, the U.S. holiday honoring war veterans and which previously marked the end of World War I.