WASHINGTON -- The Federal Reserve's chairman, Ben S. Bernanke, said Wednesday that Congress is the largest obstacle to faster economic growth, and he warned that upcoming decisions about fiscal policy could once again undermine the nation's recovery.
"The economic recovery has continued at a moderate pace in recent quarters despite the strong headwinds created by federal fiscal policy," Mr. Bernanke said in the opening line of his prepared remarks to a congressional committee.
Moreover, he said, Congress could make things worse later this year.
"The risks remain that tight federal fiscal policy will restrain economic growth over the next few quarters by more than we currently expect, or that the debate concerning other fiscal policy issues, such as the status of the debt ceiling, will evolve in a way that could hamper the recovery," he said.
The shabby condition of the economy has become a familiar background for Mr. Bernanke's public appearances. Unemployment remains stubbornly common, inflation has sagged to the lowest pace on record and growth is tepid.
These problems are the justification for the Fed's efforts to stimulate the economy, and Mr. Bernanke said Wednesday, as he has before, that the Fed would continue those efforts until the indicators returned to more healthy levels.
In particular, he has adopted a stronger tone regarding the low pace of inflation since the last meeting of the Fed's policymaking committee in June. Prices increased by just 1 percent during the 12 months that ended in May, well below the 2 percent pace that the Fed considers most healthy.
The central bank has said it plans to hold short-term interest rates near zero at least as long as the unemployment rate remains above 6.5 percent. It also is expanding its holdings of mortgage-backed and Treasury securities by $85 billion a month in an effort to accelerate the pace of employment growth.businessnews