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Fed committed to easy policy for as long as needed - Bernanke

Outgoing US Fed chief Ben Bernanke says US economy still far from where he wants it to be
Outgoing US Fed chief Ben Bernanke says US economy still far from where he wants it to be

US Federal Reserve Chairman Ben Bernanke said last night that the Fed will maintain ultra-easy US monetary policy for as long as needed.

This could mean holding interest rates near zero until "well after" US unemployment falls under 6.5%.

In a speech to the National Economists Club, Bernanke said that while the economy had made significant progress, it was still far from where officials wanted it to be.

"The FOMC remains committed to maintaining highly accommodative policies for as long as they are needed," he told the club, referring to the policy-setting Federal Open Market Committee.

President Barack Obama has nominated Janet Yellen, the Fed's current vice chair, to replace Bernanke when his term ends at the end of January.

The Fed has held interest rates near zero since late 2008 and quadrupled its balance sheet to $3.9 trillion through three massive rounds of bond buying.

It decided in October to maintain asset purchases at an $85 billion monthly pace. Bernanke said officials want evidence of durable job growth before scaling back buying.

"The FOMC still expects that labour market conditions will continue to improve and that inflation will move toward the 2% objective over the medium term. If these views are supported by incoming information, the FOMC will likely begin to moderate the pace of purchases," he said.

Fed officials meet next on December 17-18, although most economists do not think they will begin to scale back the bond buying until their meeting in either January or March.