Status quo for stimulus, Fed chief says

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WASHINGTON (AP) -- Chairman Ben Bernanke said Wednesday that the U.S. economy still needs help from the Federal Reserve's low interest rate policies.

Bernanke told the National Bureau of Economic Research that because unemployment remains high and inflation is below the Fed's target, the policies are still necessary. He also said the economy is being held back by higher taxes and federal spending cuts.

"If you put all of that together, you can only conclude that highly accommodative monetary policy for the foreseeable future is what is needed for the U.S. economy," Bernanke said.

Stock index futures rose as Bernanke spoke. The Standard & Poor's index futures were up eight points, or 0.5 percent, at 1,656 as of 5:40 p.m. Eastern Daylight Time -- shortly after Bernanke wrapped up his remarks.

Bernanke's comments were his latest effort to stress that the Fed will continue to stimulate the economy, even after it begins to slow $85-billion-a-month in bond purchases that have kept long-term interest rates down.

The Fed plans to keep its investment holdings constant to avoid causing long-term rates to rise too quickly. It also plans to keep short-term rates at record lows at least until unemployment slides to 6.5 percent.

And Bernanke has said 6.5 percent unemployment is a threshold, not a trigger: The Fed might decide to keep its benchmark short-term rate near zero even after unemployment falls that low.

Unemployment is currently 7.6 percent.


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