Fed chairman disappointed in slow economic recovery
Disappointingly slow. That's Federal Reserve Chairman Ben Bernanke's latest assessment of the economic recovery in the U.S. But, he does believe the central bank's policy changes are helping. In a speech at a European Central Bank conference in Frankfurt Friday, Bernanke said financial conditions eased notably earlier this month ahead of the Fed's decision to purchase another $600 billion of long-term Treasury securities, "suggesting that this policy will be effective in promoting recovery." Although not everyone agrees with that assessment, and some want the bond-buying program discontinued. Earlier this week, Bernanke told Republican senators the plan could eventually create up to 1 million jobs, according to an article in The Wall Street Journal. Meanwhile analysts at Capital Economics think deflation is the most grave concern. "Fears that the Fed has put the economy on the path towards rampant inflation looked even more misguided last week when it was announced that core CPI inflation fell to a record low of just 0.6% in October," analysts at the Toronto-based macroeconomic research firm said. "The real danger is that the [U.S.] economy is heading towards deflation." Bernanke praised central banks for working together the past few years as the global economic crisis took root, and for being "creative and innovative" in developing programs aimed at easing financial stress and supporting growth. Still, the banks "must be vigilant in monitoring financial markets and institutions for threats to systemic stability and diligent in taking steps to address such threats," according to the Fed chairman. He said while the actions taken thus far "helped set the stage for recovery, economic growth rates in the advanced economies have been relatively weak." He pointed to the U.S. unemployment figure that has flirted with 10% for more than a year now and low inflation that continues to decline as the main drivers keeping the American economy down. The Fed chairman still expects growth to accelerate and unemployment to decline somewhat in the coming year. Write to Jason Philyaw.