Economy ‘Very Challenging’ as Interest Rates Rise: Bernanke
CNBC.com Senior Writer
A recent rise in interest rates has caught the attention of the Federal Reserve, whose chief sees an economy that is showing gradual improvement.
Fed Chairman Ben Bernanke, in a brief interview with CNBC on his way to teach college students at George Washington University, said he remains concerned with the pace of growth.
"We're going to continue to analyze the financial data we get," he said of the current economic conditions. "It's an interesting period right now. We've seen some improvement, but we've still got a long way to go."
Today marks the first of four classes Bernanke will lead regarding the central bank and its role in the economy. He said "it's fun to engage with them" and he hopes to give the students a broader understanding of the Fed's unprecedented interventions since the financial crisis.
"The economy is still very challenging. Unemployment is still high, and that creates problems for everybody, obviously," he said. "I think the longer-term prospects of the country are very good and ultimately things will normalize, but in the short run of course we're still dealing with some important challenges."
The Fed has found itself in the middle of a market guessing game that has focused on when and whether the central bank will expand its easing programs.
At its most recent meeting, the Open Market Committee pointed to an uneven recovery while Bernanke himself has said he expects continued weakness in the jobs market. Still, the Fed offered no clues as to when it might institute a third round of quantitative easing.
Its most recent accommodative move ends in June. Nicknamed Operation Twist, the Fed has been selling its shorter-dated debt and buying longer-debt debt in hopes of driving down borrowing rates. The $600 billion program has coincided with a sharp rise in stocks.
But with inflation concerns elevating, the central bank is unlikely to implement more easing unless the economic data shows a noticeable downturn.