US Federal Reserve chairman Ben Bernanke said the outlook for the long-suffering US economy appears to be improving.
Mr Bernanke also said the US central bank was carefully reviewing ways to withdraw its massive monetary policy stimulus when conditions permit.
But Bernanke cautioned that unemployment was likely to remain high into 2011, and he warned that this could sap fragile consumer confidence and potentially undermine what is expected to anyway be a very gradual recovery.
'The FOMC believes that a highly accommodative stance of monetary policy will be appropriate for an extended period,' Bernanke, referring to the policy-setting Federal Open Market Committee, told US lawmakers in remarks prepared for delivery in semi-annual congressional testimony.
'However, we also believe that it is important to assure the public and the markets that the extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation,' he said.
Mr Bernanke added that the Federal Reserve is likely to maintain its easy money policy for some time despite the signs of improvement.
'In light of the substantial economic slack and limited inflation pressures, monetary policy remains focused on fostering economic recovery,' he said.
He also maintained the Fed was working on a so-called 'exit strategy' to unwind the trillion-dollar effort once a recovery takes root.
He said the vast effort 'can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation.'
