WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke tells Congress there’s increasing evidence that a “self-sustaining” economic recovery is taking hold, but he says the Fed’s $600 billion Treasury bond-buying program is still needed because it will take years for unemployment to drop to more normal levels.
In prepared testimony to the Senate Banking Committee on Friday, Bernanke offered a more optimistic outlook, saying the economy should grow more strongly this year as consumers and businesses boost their spending. However, he said that it could take four to five years for unemployment, to drop to a historically normal rate of around 6 percent.
Bernanke spoke one hour before 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. It suggested only slow healing in the jobs market.
The bond purchases are designed to bolster the economy by lowering interest rates and lifting stock prices.
