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Fed chief Bernanke says interest rates need to remain low

WASHINGTON — Against a backdrop of new signs that the economic rebound is sputtering, with sales of new homes hitting a record low last month, Federal Reserve Chairman Ben Bernanke reiterated the need Wednesday to continue record-low interest rates for "an extended period."

Bernanke told Congress that low rates will help ensure that the recovery will last and help ease the sting of high unemployment. Asked what else Congress could do to stimulate job creation, he hesitated to say.

"I'm sure you know the menu of things that you could do which could create jobs," he said.

"Unfortunately, there's no — there's no silver bullet here."

Bernanke, in his twice-yearly report to the House Financial Services Committee, said the rebound would endure but also sought to restrain hopes. He said the Fed sees moderate growth that will cause only a slow decline in the nearly double-digit jobless rate.

He offered no new clues about when the Fed would eventually raise interest rates. Most economists think it's months away.

Underscoring the fragility of the housing market, the government said new-home sales dropped 11 percent last month, to a seasonally adjusted annual pace of 309,000 units. That's the lowest level in the nearly 50 years records have been kept.

Winter storms were partly to blame. But sales have dropped for three straight months despite vast government support, some of which is scheduled to end in coming months.

Fed chief Bernanke says interest rates need to remain low 02/24/10 [Last modified: Wednesday, February 24, 2010 8:49pm]
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