The Fed chairman provided a modestly more rosy outlook for the world's largest economy than he has done in previous speeches, citing gains in household spending, improved confidence, and stepped up bank lending as signs 2011 may bring stronger growth than 2010.
"Although economic growth will probably increase this year, we expect the unemployment rate to remain stubbornly above, and inflation to remain stubbornly below, the levels that Federal Reserve policymakers have judged to be consistent over the longer term with our mandate," he said in remarks prepared for delivery to the National Press Club in Washington D.C.
Bernanke's comments suggest a Fed that believes it has plenty of time to let its policies boost growth and pull down a lofty unemployment rate before it needs to worry about tightening financial conditions to keep any price pressures in check.
Even the hard hit job market shows some grounds for optimism, Bernanke said.
However, modest growth and cautious hiring suggest that it will be several years before the jobless rate returns to a more normal level, he said.
"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," he said.
The Fed chairman defended the U.S. central bank's controversial $600 billion bond buying program, saying its benefits are evident from a range of financial market metrics.
These include higher stock prices and less volatility in equities markets and narrower spreads between riskier and less risky corporate bonds, he said.
U.S. Treasury bond prices extended losses after Bernanke's comments.
Bernanke played down worries that recent commodity price rises pose an inflation threat.
"Overall inflation remains quite low," he said.
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