WASHINGTON — Federal Reserve Chairman Ben Bernanke sketched a more optimistic view of the economy, but said the Fed’s $600 billion bond- buying program is needed because unemployment is likely to stay elevated for up to five more years.
Bernanke told the Senate Budget Committee there’s increasing evidence that a “self-sustaining” recovery is taking hold. He said he expects stronger economic growth because consumers and businesses will boost spending this year.
Bernanke spoke one hour after the government released a disappointing employment report. Employers added only 103,000 jobs in December. The unemployment rate fell to 9.4 percent partly because people gave up looking for jobs. Many economists had forecast much bigger job gains.
Asked about Friday’s 103,000 job gains, Bernanke said if that pace of job creation were maintained “you won’t see sustained declines in the unemployment rate.”
The Fed chief defended the central bank’s move to buy $600 billion in Treasurys through June and gave no hint that it would change its course. The bond purchases are designed to boost the economy by lowering interest rates and lifting stock prices.
The program has been criticized by Republicans in Congress and some Fed officials who say it could hurt the economy by unleashing inflation and speculative buying on Wall Street.
