“The economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the committee had expected,” Fed Chairman Ben S. Bernanke said at a press conference after a meeting of the Federal Open Market Committee. Bernanke and his colleagues on the panel cut their growth forecasts for this year and next and raised their estimates for the unemployment rate, driving stocks lower.
Bernanke said that unemployment, now at 9.1 percent, will come down “very painfully slowly” even after the pace of economic growth picks up starting in the second half of the year. Some of the reasons for the slowdown, such as higher commodity prices and supply-chain disruptions caused by the March earthquake and tsunami in Japan, will be temporary, he said. Others, including declines in home prices and financial- sector weakness, may be more long-lasting.
“Some of these headwinds may be stronger and more persistent than we thought,” Bernanke said. “We don’t have a precise read on why this slower pace of growth is persisting.”
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