The economy is running “well below” potential and job creation is lagging, so monetary policy accommodation remains necessary, especially with medium-term inflationary expectations subdued, Federal Reserve Board chairman Ben Bernanke said Tuesday at the International Monetary Conference in Atlanta.

“The U.S. economy is recovering from both the worst financial crisis and the most severe housing bust since the Great Depression, and it faces additional headwinds ranging from the effects of the Japanese disaster to global pressures in commodity markets,” Bernanke said, according to prepared text released by the Fed.

“In this context, monetary policy cannot be a panacea.”

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