–8.3% Unemployment Rate Still ‘Too High’
–Not Quite At Point To Say On Track To Full Recovery
–End-2014 Date Not A Guarantee, Change Plans if Economy Looks Different
–Don’t See High Gasoline Prices Endangering Economic Recovery

WASHINGTON (MNI) – Federal Reserve Chairman Ben Bernanke Tuesday
underlined his currently dovish credentials, saying in a rare television
network interview that while encouraged by recent economic data, he
remains “cautious” is against changing the Fed’s highly accommodative
stance “too quickly.”

He also cautioned that if economic conditions should become
stronger or weaker, the Fed’s estimate that interest rates will remain
low through late-2014 will have to change.

In the transcript of an interview with ABC News’ Diane Sawyer to
air at 6:30 p.m. ET, Bernanke warned that economy still has “a long way
to go,” adding “it’s far too early to declare victory.”

Bernanke’s concern remains the nation’s employment crisis, and he
said despite more jobs being created, the 8.3% unemployment rate remains
“too high,” and it is important for to support the recovery and help
people get back to work.

Also, “housing remains a big concern for us,” he said, describing
the market as “kinda still pretty flat.”

“We’re not really yet in a full-fledged housing recovery. And you
know, that will be part of the full recovery of the economy,” Bernanke
added.

As a result, “I think as policymakers we need to be cautious and
not change policy too quickly,” the Fed chief said. “I think it’s
really important not to be complacent.”

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

Going forward, Bernanke said he would like to see stronger growth
that will guarantee progress in the labor market. “Unless we get faster
growth than we’ve been seeing it is probably going to take a while
still,” he said.

Still, Bernanke said he is sleeping “a little better,” noting for
example that “some of the issues related to Europe where there’s been a
lot of financial stress have become a little bit less worrisome lately.”

As for the expectation by the Fed’s policymaking Federal Open
Market Committee that interest rates will remain low at least through
late-2014, Bernanke warned that the statement should not be taken as a
guarantee.

“We’ve said very clearly that that’s our best estimate … . But of
course if the economy looks different, if things get a lot stronger or a
lot weaker we’ll have to change our plans,” he said.

“As things continue to improve, if they improve at the rate I hope
that they will, we’ll obviously change our forecast and communicate that
we think that things are normalizing,” he said.

As for whether the Fed would implement another round of
quantitative easing, Bernanke said:

“We don’t take any options off the table. We don’t know what’s
going to happen in the future and we have to be prepared to respond to
however the economy evolves.”

With regard to the second leg of the Fed’s dual mandate, price
stability, Bernanke said he has 100% confidence the Fed will be able to
unwind its massive balance sheet when the time comes, adding, “I’m not
guaranteeing that the inflation will be exactly on target, but we’re
going to do our very, very best to make sure it is.”

The current high level of gasoline prices is also weighing on the
minds of consumers, and Bernanke acknowledged they are “a major
problem,” but — from the economy’s point of view — they are a moderate
risk.

“We’ll see a little bit higher inflation the next few months
because of the higher gas prices,” he said. “And we’ll see consumers
with a little less income to spend. And that will also be a bit of a hit
on growth. But at this level … we don’t think it’s going to be
anything that’s going to stall the recovery,” he said.

Some are of the opinion that the Fed will remain in a holding
pattern until after the November elections in order to avoid becoming a
target for politicians that are never shy about bashing the central
bank.

Bernanke, however, reiterated the Fed’s singular focus on helping
the economy with no attention paid to political rhetoric.

“Our job is to do the right thing for the economy irrespective of
politics. And we’re not paying any attention to election calendars or
political debates. We’re looking at the economy. We want to make the
right decision. We want to do it without political pressure, and that’s
what we’re going to do,” he said.

Bernanke also repeated his hope that before the administration and
Congress will act before the end of the year when a sharp change in
fiscal policy is set to take effect.

“Important thing is whether people can get together and do what’s
necessary for the country, and we’re urging them to do that,” he said.

** MNI Washington Bureau: 202-371-2121 **

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