US Federal chief for continuing stimulus efforts

The US Federal Reserve Chairman Ben Bernanke has told the US Congress on Wednesday that the US job market remains weak and that it is too soon for the central bank to end its extraordinary stimulus programs.

In testimony to the Joint Economic Committee, Bernanke noted that the economy is growing moderately this year and unemployment has fallen to a four-year low of 7.5 per cent. Still, unemployment remains well above levels consistent with healthy economies. And Bernanke said higher taxes and deep federal spending cuts are expected to slow economic growth this year. Reducing the Fed's efforts to keep borrowing rates low would 'carry a substantial risk of slowing or ending the economic recovery', Bernanke said.

The Fed is pursuing an aggressive program of bond purchases to try to keep long-term interest rates down and encourage borrowing and spending. The Fed has said it plans to continue its $85 billion-a-month in Treasury and mortgage bond purchases until the job market improves substantially.

Investors have been closely scrutinizing policymakers' comments in recent weeks for clues about the pace of the bond purchases. The Fed said after its April 30-May 1 meeting that it could increase or decrease the pace depending on how the job market and inflation fare.

Bernanke's comments suggest the Fed is not ready to taper its purchases. He has had solid support for the bond purchases among the voting members of the Fed's interest-rate setting committee. A At each of the Fed's three policy meetings this year, the committee has approved the purchases 11-1.