FED Chairman Ben Bernanke expressed his support of the continuing economic easing policy in his speech at FEDs May meeting today. According to his statement, such course had been favorable for US Economy, but he also warned that Federal Reserve Bank could not compensate negative influence, imposed by federal budget restraints.
Bernanke announced that while conditions in the labor market have shown some recent improvement, long-term employment rates have remained at historic high levels and consumer price inflation has been low. withdrawing monetary stimulus could cause interest rates to rise temporarily, but also could carry a risk of slowing or terminating the US economic recovery and causing inflation to drop further.
During his testimony Bernanke did not present any new information, regarding the stimulus pace, something which investors had been speculating on for the past few days. More precisely, it did not become clear when FED intends to decelerate bond purchasing program from its current pace of 85 billion US dollars per month.
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