Federal Reserve Chairman Ben Bernanke said a full economic recovery is at least another two to three years away and that a low Fed rate will be in place for some time.
During his semi-annual testimony before the U.S. Senate Banking Committee, Bernanke noted that the start of an economic recovery in 2010 will only be possible with a stabilization in markets and banks.
"If actions taken by the Administration, the Congress, and the Federal Reserve are successful in restoring some measure of financial stability--and only if that is the case, in my view--there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," Bernanke said in his prepared opening remarks.
However, he noted the view of policy-makers that "a full recovery of the economy from the current recession is likely to take more than two or three years."
The chairman also said the Fed's "exceptionally low" interest rates will be in place for some time as "significant stresses" persist in many markets. He forecasts the "sharp contraction" to continue into the first quarter.
Bernanke noted further that the Fed is committed to using "all available tools" to help the economy out of the current "severe contraction."
By Stephen Huebl and edited by Sarah Sussman
©CEP News Ltd. 2009