Ben Bernanke painted a stark picture of the economy today, warning that "formidable headwinds" are working against the incipient recovery. Despite an unexpectedly positive jobs report, the pace of expansion is likely to remain "moderate," the Fed chair said. “Despite the general improvement in financial conditions, credit remains tight for many borrowers,” and the job market “remains weak,” Bernanke said in a speech to the Economic Club of Washington.
Because of the dangers to recovery, the Fed will keep monetary policy loose for the foreseeable future, Bloomberg reports. “Right now we are still looking at the extended period given that conditions remain low rates of utilization, subdued inflation trends, and stable long-term inflation expectations,” Bernanke said.