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Bernanke warns of long-term unemployment
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10:34, July 28, 2009

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KANSAS CITY, Missouri: The US jobless rate is likely to stay high even once the nation exits recession some time in the next few months, Federal Reserve Chairman Ben Bernanke said.

Taping a Bernanke on the Record special that will air on PBS this week, the top US monetary policymaker defended the aggressive, even unorthodox actions taken by the Fed during the long recession and deep financial crisis.

"I was not going to be the Federal Reserve Chairman who presided over the second Great Depression," Bernanke said.

"When you're in a situation like this, a perfect storm, sometimes you have to do things that are a little unorthodox, out of the box,"

Speaking to an audience drawn from local citizens, Bernanke said the Fed is doing all it can to turn the economy around.

"The Federal Reserve has been putting the pedal to the metal," he said, adding that "recessions happen."

But Bernanke said it takes GDP growth of about 2.5 percent to keep the jobless rate constant. The Fed's current outlook does not call for growth to reach that level in the latter part of 2009.

Latest government data show the US unemployment rate at 9.5 percent, the highest since 1983.

"We're doing everything we can to support the economy. We hope that will get us going some time next year." In the meantime, inflation is likely to stay low for the next couple of years.

Asked about his opinion on the dollar, Bernanke said the US central bank, in general, supports a strong dollar policy.

"The best way to have a strong dollar is to have a strong economy," he added.

The forum, moderated by veteran anchorman Jim Lehrer, was attended by about 190 local citizens pulled together by a nonpartisan civic group.

Bernanke bristled with emotion when asked about assaults on the Fed's independence - notably, a proposal in Congress for the Government Accountability Office (GAO) to be able to "audit" the Fed's interest rate decisions.

"I don't think that's consistent with independence. I don't think the American people want Congress running monetary policy. That's exactly what (the bill) would do," he said.

"Studies have shown that political influence does not lead to good policy."

Source:China Daily/Agencies

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