Forget QE2, Bernanke Says Lookout for QE3

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Forget QE2, Bernanke Says Lookout for QE3


December 6, 2010 7:55 AM EST

Federal ReserveChairman Ben Bernanke said Sunday in an interview with CBS Corp.'s (NYSE: CBS) 60 Minutes that the U.S. economyis barely expanding and that the Fed may need to extend bond purchases past the $600 billion included in QE2 to push growth. Quantitative

“We’re not very far from the level where the economy is not self-sustaining,” Bernanke said. “It’s very close to the border. It takes about 2.5 percent growth just to keep unemployment stable and that’s about what we’re getting.”

The comments from the Fed Chairman come just days after it was announced by the Labor Department that the U.S. economy added just 39,000 jobs in November and that the unemployment rate rose to 9.8 percent, the highest level since April.

“At the rate we’re going, it could be four, five years before we are back to a more normal unemployment rate,” Bernanke said.

He also reiterated that policy in China of limiting gains in its exchange rate is damaging the U.S. economy.

“Keeping the Chinese currency too low is bad for the American economy because it hurts our trade,” the chairman said. “It’s bad for other emerging market economies. It’s bad for China because among other things it means China can’t have its own independent monetary policy.”

Bernanke said that the a double-dip recession is not likely due to sectors of the economy not capable of becoming much more depressed.