Fed officials flag soft economy but mum on easing
By Pedro Nicolaci da Costa
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke and other top officials of the U.S. central bank on Thursday highlighted risks to the economic recovery despite recent signs of strength, but offered few hints that any additional monetary stimulus might be needed.
Bernanke told lawmakers there was reason to be suspicious of the recent decline in unemployment given the weakness of economic growth.
"There's still a bit of a contradiction between the improvement in the labor market and the speed of the overall recovery," Bernanke said in a second day of testimony to Congress. "You've still got consumption spending growing relatively weakly."
Two of the Fed's regional presidents, Sandra Pianalto of Cleveland and Dennis Lockhart of Atlanta, also cited the economy's shaky stance, with Pianalto signaling that policy was appropriate for the current environment.
"There'd have to be a significant change to my outlook to change my position on policy at this time," she said in rare press briefing.
The Fed had held interest rates near zero since December 2008 and has vowed to maintain ultra-low rates at least through late 2014. The U.S. central bank has also made $2.3 trillion in asset purchases in a bid to drive down rates and stimulate growth. Many financial market observers have been watching closely to see if the Fed will signal a new round of assets purchases, known as quantitative easing.
U.S. gross domestic product grew 3 percent in the fourth quarter, but data on Thursday pointed to a stagnation in consumer spending.
Bernanke suggested the divergence is in part due to a recovery that has boosted profits more than wages. Continued...