Finance

Finance

Fed Chairman Bernanke: Sleeping easier, but economy has ’a long way to go’

28 March 2012 08:57 (UTC +04:00)

Baku - APA-Economics. Federal Reserve Chairman Ben Bernanke is sleeping better now than he did a year ago, but says the economy still has "a long way to go."

"Things are ... moving in the right direction," he said in an interview with Diane Sawyer that will air Tuesday night on ABC "World News." "So yeah, I’m sleeping a little better. But again, I think it’s really important not to be complacent. ... We have a long way to go."

While recent economic developments, especially in the labor market, have indicated that the recovery could be gaining steam, Bernanke hit a cautious note, saying it was too soon to declare the recovery has taken permanent hold.

"It’s far too early to declare victory," he said.

"We need to be cautious and make sure this is sustainable," he added. "We haven’t quite yet got to the point where we can be completely confident that we’re on a track to full recovery."

Bernanke keyed in on the long-term unemployed as a particular cause for concern. The longer they stay out of the work, the less likely it is they will ever be able to reclaim their previous spots on the economic ladder.

"Their skills could be eroding," he said. "They may never be able to get back into the labor force at the same earnings or same occupation that they had when they ... lost their jobs."

Bernanke’s Fed has pushed extremely accommodative monetary policy in an attempt to boost the economic recovery, telling markets it expects to keep interest rates near zero until the end of 2014. But those moves have opened it up to Republican criticism, who argue that the easy money policies are encouraging damaging inflation that would wreak havoc on the value of the dollar.

While the Fed, and Bernanke himself, have come under political fire in the last year, he said it was not affecting the central bank.

"Politics is politics," he said. "We’re not paying any attention to election calendars or political debates. We’re looking at the economy."

While the Fed is concerned with the economy and the employment picture, Bernanke promised it is not losing sight of the second half of its mandate, controlling inflation. However, he pushed back when Sawyer suggested that the Fed had complete control over it, citing a previous interview where she said he said the Fed had 100 percent control over inflation.

"No, I didn’t say that," he responded. "The question was, did we have confidence in the tools that we have to unwind the large balance sheet increases ... I do have 100 percent confidence that when the time comes to unwind the actions we’ve taken, that we would be able to do that.

"Keeping inflation low and stable is gonna require more than just the technical tools," he added.

Bernanke also credited the Fed for keeping the financial crisis of 2008 from becoming something far worse.

"I think we averted what would have been the really terrible outcome," he said.

He was coy when asked about his future plans, including whether he planned to serve out his full second term, which expires in 2014, or if he would accept a third term from the president at that time.

"These are hypothetical contingencies. I’m not going to worry about them now," he said.