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US jobless rate to stay high, Fed says

02 March 2011 04:46 (UTC +04:00)

Baku-APA. US Federal Reserve Chairman Ben Bernanke says the US unemployment rate will remain high for years to come, despite relatively modest economic growth this year, APA reports quoting Press TV.

On Tuesday, Bernanke once again defended the Fed’s 600-billion-dollar Treasury bond-purchase plan to rev up the slow pace of the US economic recovery, but warned that the scheme is unlikely to make a dent in unemployment, a Press TV correspondent in Washington reported.

"Even so, if the rate of economic growth remains moderate, as projected, it could be several years before the unemployment rate has returned to a more normal level," Bernanke said.

He predicted that the unemployment rate, now stranding at around 9 percent, would drift down to 7.5 to 8 percent by the end of 2012.

Bernanke also turned the spotlight on the sudden rapid rise in oil and gas prices in the aftermath of the unrest in the Middle East and North Africa, saying the spike in oil prices could derail the US economic recovery.

"Sustained rises in the prices of oil and other commodities would represent a threat both to economic growth and to overall price stability," he told the Senate Banking Committee on Tuesday.

Oil prices have soared to their highest levels in more than two years due to the situation in Libya and other parts of the Middle East and North Africa, reaching $103 per barrel last week.

Bernanke also stated that rising oil prices may be temporary, but if the price of gasoline jumps to $5 a gallon, it would push the US back into deep recession, causing inflationary pressure on nearly everything.

Elsewhere in his remarks, Bernanke sought to temper his grim assessment with optimism, saying that now that Wall Street is reporting profits, businesses may begin to invest in hiring, but many analysts see the trends as darker.

"I think it will get much, much worse, and I think we’ll see a much higher unemployment rate as we get into the next few months," Bill Jones of Executive Intelligence Review told Press TV.

The US Federal Reserve chairman also pointed to new figures that show the US housing market remains weak.