THE chairman of the US Federal Reserve, Ben Bernanke, has played down concerns about the Fed's economic stimulus campaign, describing it as necessary and effective and making clear it was likely to continue for some time.
Testifying before the Senate Banking Committee, Mr Bernanke was relatively upbeat about the broader US economy, which he said was growing again after pausing in the fourth quarter. But he said unemployment remained high.
"In the current economic environment, the benefits of asset purchases, and of policy accommodation more generally, are clear," Mr Bernanke said. "Monetary policy is providing important support to the recovery" even as inflation remains in check.
The Fed, which has amassed almost $US3 trillion in Treasury and mortgage-backed securities to promote more borrowing and lending, is expanding holdings by $US85 billion a month until it sees improvement in the labour market. It plans to hold short-term interest rates near zero at least until the unemployment rate falls below 6.5 per cent.
Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors, said the testimony was a "robust defence" of the aggressive efforts by the Federal Open Market Committee that "gives no ground to those within and without the FOMC who think asset purchases will soon need to be curtailed".