Bernanke: Economy still needs Fed stimulus

Federal Reserve Chairman Ben Bernanke said Wednesday the central bank

will likely keep at least some of its easy-money policies going "for

the foreseeable future."



Noting that unemployment is still too high and inflation too low,

Bernanke said, "both sides of our mandate are saying we need to be

more accommodative."



He spoke about Fed policies in a Q&A session after a speech in

Cambridge, Mass., to the National Bureau of Economic Research.this



Bernanke rattled stock and bond markets last month when he said the

Fed likely will reduce its stimulus later this year and end it by

mid-2014, assuming the 7.6% jobless rate falls to 7% by then. The Fed

is buying $85 billion a month in government bonds to hold down

long-term interest rates.



FED MINUTES: Some support for stimulus end in 2013



Financial markets assumed that Bernanke's roadmap also meant that the

Fed likely will raise its benchmark short-term interest rate in late

2014, instead of mid-2015 as anticipated.



But Bernanke reiterated that the Fed won't consider raising short-term

rates until the unemployment rate reaches 6.5%.



The Fed chairman also suggested that policymakers could keep the

bond-buying program at full throttle longer if the economy wobbles.

While the housing market is improving and buoying consumer wealth,

federal spending cuts still could dampen growth, he said. "it's still

too early to say we have weathered the fiscal restraint," he said.



And if interest rates continue to rise in anticipation of Fed actions,

hobbling the economy, "we'll have to push back against that," Bernanke

said.



In his prepared speech earlier, Bernanke says the 2008 financial

crisis showed the Federal Reserve that it must strengthen its approach

to both regulation and interest-rate policies.



Bernanke says the U.S. economy has yet to fully recover from the downturn.



MORE: Read the text of the speech



His speech focused on the Fed's successes and failures in managing the

economy over the past 100 years. Bernanke told the audience he would

not address the Fed's current policies in his speech but that he

expected to be asked about it during a question and answer period.