Bernanke: Economy Slowing but Faster Growth Ahead

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Federal Reserve Chairman Ben Bernanke says Washington urgently needs to take care of its massive debt so the U.S. economy can be healthy in the future.

Speaking on Tuesday at a banking conference in Atlanta, Bernanke also said the current economic recovery is weak, but he expects it to keep going without any serious outbreak of inflation.

"Overall, the economic recovery appears to be continuing at a moderate pace albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers," he said.

The Fed chairman made no mention of any new steps the central bank might take to boost the economy. He said the economy still needs the benefit of low interest rates. The Fed is scheduled to meet in two weeks and is all but certain to keep those rates at record lows.

Benanke repeated a pledge that Federal Reserve officials have been making for more than two years: that they will keep interest rates at record lows "for an extended period."

He says higher gas prices and the crisis in Japan have been some of the reasons the economy has slowed down, but he expects it to pick up again later in the year.

Stocks fell after Bernanke began speaking. The Dow Jones industrial average erased gains made earlier in the day and closed down for the fifth straight day, as did broader indexes.

"The market was disappointed," said David Jones, head of DMJ Economic Advisors, a private consulting firm. "Wall Street investors were hoping for the promise of another round of credit easing, and they didn't get it."

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