Chairman Ben Bernanke says the Federal Reserve's low interest-rate policies are providing key support for an economy still struggling with high unemployment. He is signaling that the Fed's efforts to keep borrowing costs low will continue.
Bernanke acknowledges that the Fed's aggressive program to buy $85 billion a month in Treasurys and mortgage bonds to keep rates low could eventually ignite inflation or unsettle investors. But he says those risks are contained for now.
Delivering the Fed's semiannual report to Congress, Bernanke says the bond purchases are helping to sustain economic growth.
On budget policy, Bernanke urges Congress to replace the automatic spending cuts that are due to start Friday with more gradual reductions in budget deficits in the short run.
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