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Bernanke Optimistic about Economic Recovery, But Warns of Future Fiscal Position

0610-bernanke-house.jpg_full_600Chairman of the Board of Governors of the Federal Reserve System Ben Bernanke expressed optimism for the future of the U.S. economic and financial conditions in his address to the House Budget Committee.

Bernanke called the pace of the economic recovery “moderate” since the end of 2009, and he does not see this slow climb to financial stabilization ending any time soon.

“The economy– supported by stimulative monetary policy and the concerted efforts of policymakers to stabilize the financial system– appears to be on track to continue to expand through this year and the next,” he said.

Bernanke also expressed optimism for the positive effects of the euro’s value increase, giving confidence in the European economy. Traders have been watching Europe as governments find various ways to reduce spending. As Bernanke explained, a slow European economy could help keep interest rates low, and could also restrain oil prices, but it would also cut into trade.

While Bernanke also explained a forecast subdued inflation rate and rising consumer spending, he also cautioned of a rocky fiscal position since the onset of the financial crisis. Due to the size of the nation’s deficit, the lack of policy actions to reduce government spending places the federal budge on an “unsustainable path.”

“Achieving long-term fiscal sustainability will be difficult,” he said. “But unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have either financial stability not healthy economic growth.”

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