Low interest rates will be a fact of financial life for another two or three years, Ben Bernanke said in his first news conference of the year.
Bernanke, chairman of the Federal Reserve, said that 14 of 19 Federal Open Market Committee participants predict an increase in the benchmark federal funds rate in 2015 or 2016. That's a guess, of course. But it indicates that low rates will last a while longer.
Listen as Bankrate's Mark Hamrick and Janna Herron recap the Fed meeting:
Jobs are the big factor
One of the key tools the Fed has been using in its attempt to stimulate the economy has been $85 billion in monthly asset purchases. While carefully saying that the decision will be up to the committee, Bernanke said that several months of improvement in the unemployment rate must be seen before the bond purchases are curtailed. He said factors being watched include the unemployment rate, job growth, weekly jobless claims and other measures.
No crisis is an island -- or is it?
Bernanke downplayed concern over the risks of a global spillover from the banking crisis in Cyprus. The parliament in the Mediterranean country stopped short of going along with international demands that it tax (some might say "seize") ordinary savers' deposits to pay for a portion of a bailout. Bernanke said he doesn't believe the standoff "has direct implications" for the U.S. economy.
Along with its statement on monetary policy, the Fed revised its economic projections to reflect a slightly better outlook for employment compared to previous projections. It calls for the unemployment rate to range from 5.7 percent to 6.5 percent in 2015.
Memo to Washington: Grow up
In what has become a common refrain for Bernanke, he again called on President Barack Obama's administration and Congress to come to terms on budget solutions, which so far have been elusive. Even so, the tone of the Fed's official statement, taken together with Bernanke's words, indicate no particular alarm on the possible impacts of the budget impasses.
Asked whether there's a bubble in the stock market, Bernanke said, "We do monitor the financial system, not just the parts that we regulate." With the Dow Jones industrial average continuing to notch record highs, Bernanke said, "We don't see, at this point, anything that's out of line with historical patterns." Bernanke, who worked in academia before joining the central bank, noted that the Dow wouldn't look like it hit a record high if you adjust for inflation and economic growth.
Stay? Go? Whatev
Bernanke was again pressed about whether he plans to step down as scheduled early next year. While he said that he has spoken to Obama "a bit" on the subject, he stopped short of providing reporters with further information.
Bernanke said "no single person is essential" to running the Fed. Vice Chair Janet Yellen is widely seen as a possible successor, if Bernanke isn't reappointed by Obama.