Federal Reserve Chairman Ben Bernanke on Wednesday said the economy must show signs of sustained improvement before the central bank will curtail its long-running monetary stimulus program.
Bernanke offered no timeline as to when the Fed would begin reducing purchases of mortgage-backed assets, saying any decisions would be based on incoming economic data, with a keen eye on improvements in the labor market.
“We are looking at whether or not we have seen real and sustainable progress in the labor market outlook,” Bernanke told the Joint Economic Committee on Wednesday.
“I hope to provide more information going forward, and that we can exit over time in a way that is consistent with our policy objectives,” he said.
The Fed is currently engaged in its third round of “quantitative easing” and intends to buy $85 billion in government and mortgage bonds until there is substantial improvement in the labor market.
Since December, the central bank has said it would hold short-term interest rates near zero until the unemployment rate drops below 6.5 percent — it now stands at 7.5 percent — or inflation climbs above 2 percent. Rates have been near zero since late 2008.