WASHINGTON (MNI) – The following is a transcript from the ongoing
news conference with Federal Reserve Chairman Ben Bernanke, in which he
comments on unemployment and also says medium-term inflation
expectations are close to the mandated consistent level:

CHAIRMAN BERNANKE: Well, as I mentioned, we have made a lot of
progress. Last August when we began to talk about another round of
securities purchases, growth was very moderate and we were actually
quite concerned that growth was not sufficient to continue to bring the
unemployment rate down. Since then, we have seen a reasonable amount of
payroll creation, job creation. That picked up in the most recent few
months, together with a decline in the unemployment rate from, you know,
10 percent down to the current rate of 8.8 percent.

Labor market is improving gradually, as we say in our statement and
we just like to make sure that that is sustainable and the longer it
goes on, the more confident we are. Again, it is encouraging to see the
improvement we have seen in recent months. That being said, the pace of
improvement is still quite slow and we are digging ourselves out of a
very, very deep hole. We are still something like 7 million plus jobs
below where we were before the crisis. So clearly, the fact that we are
moving in the right direction even though that’s encouraging doesn’t
mean that the labor market is in good shape. Obviously it’s not, we are
going to have to continue to watch and hope that we will get stronger,
increasingly strong job creation going forward.

—

CHAIRMAN BERNANKE: Well, again, the inflation expectations that we
are concerned about are medium term inflation expectations. So we have
seen, for example, in the financial markets in the indexed bond market,
for example, or in surveys like the Michigan survey we have seen near
term inflation expectations rise fairly significantly, which is
reasonable given higher commodity prices, higher gas prices. But for the
most part although there has been some movement here and there, for the
most part I think it’s fair to say that medium term expectations have
not moved very much and they still indicate confidence that the Fed will
ensure that inflation in the medium term will be close to what I called
the mandated consistent level.

What can we do? In the short run we can communicate and make sure
that the public understands what our policy is attempting to do. To be
clear what our objectives are and what steps we are willing to take to
meet those objectives. Ultimately if inflation persists or if inflation
expectations begin to move, there’s no substitute for action. We would
have to spoon. I think while it is very, very important for us to try to
help the economy create jobs and to support the recovery, I think every
Central Banker understands that keeping inflation low and stable is
absolutely essential to a successful economy. We will do what’s
necessary to ensure that that happens.

** Market News International Washington Bureau: (202) 371-2121 **

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