With near-term indicators showing little sign of improvement, the Federal Open Market Committee sees the federal funds rate remaining low for “some time,” Federal Reserve Board chairman Ben S. Bernanke told Congress yesterday.
“The FOMC anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” Bernanke said, according to prepared text of his testimony before the Senate Budget Committee.
Bernanke believes measures in the budget will help spur the economy, but warned that Congress must “consider the formidable challenges and trade-offs needed to simultaneously achieve an economic and financial recovery, fiscal responsibility, and program reforms that accomplish their desired goals effectively and efficiently.”
Policymakers must restore stability to the financial system and put the economy on a sustainable path to recovery, but not at the cost of “fiscal imbalances,” the Fed chief said. “Without fiscal sustainability, in the longer term we will have neither financial stability nor healthy economic growth.”