WASHINGTON — Federal Reserve Chairman Ben S. Bernanke said Wednesday that central bank policymakers decided to modestly reduce a key stimulus program because of "meaningful" progress in the jobs market, but emphasized the economy "has much farther to travel."
"The recovery clearly remains far from complete," Bernanke said in his final scheduled news conference.
To emphasize that point, Bernanke and his colleagues on the Federal Open Market Committee also decided to send a strong signal that they were committed to continuing to try to stimulate the economy.
The Fed said it would keep its short-term interest rate at near zero until "well past the time" that the unemployment rate drops below 6.5%. In the past, the Fed has said it would hold rates low as long as the unemployment rate was above 6.5%. November's jobless rate was 7.0%.
“We’re still going to buy assets at a high rate," Bernanke said.
"We're not doing less," he continued. "We're providing a great deal of accommodation to the economy."
Starting in January, the Fed will reduce its monthly bond buying to $75 billion from the $85-billion pace begun in September 2012.
If the job market continues to improve as the Fed expects, the pace of bond buying will be reduced in "further measured steps" in coming months, Bernanke said.
If economic growth slows, the Fed could skip additional reductions for "a meeting or two" and could go faster if growth picks up, he said.
"My expectation is for similar moderate steps going forward through most of 2014," when the program would end, Bernanke said.
Fed policymakers continue to be concerned about low inflation. Price growth is running well below the Fed's annual target of 2%, raising the risk of deflation.
Fed officials project inflation will start moving back toward its long-term target.
But Bernanke said, "If inflation does not show signs of returning to target, we will take appropriate action."
Bernanke spoke at his the last scheduled news conference before he steps down as Fed chairman next month. Fed Vice Chair Janet L. Yellen, who is expected to be confirmed as his replacement by the Senate this week, will take over after Bernanke's term ends Jan. 31.
Bernanke said he did not rush a decision to taper before he left office and that he consulted with Yellen on Wednesday's move as he has with previous actions.
"She fully supports what we did today," Bernanke said.
As for his eight years as chairman, which included the worst financial crisis and economic downturn since the Great Depression, Bernanke said, "I hope I live long enough to read the textbooks."
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