8 Dec 2009

US recovery still has some way to go - Bernanke

1:12 pm on 8 December 2009

US Federal Reserve chairman Ben Bernanke says the economic recovery in the United States has some way to go before it's self-sustaining.

Last week, official figures showed job losses slowed sharply, and unemployment eased back from 26.5 year high, raising fears among investors the bank will raise interest rates sooner than expected.

Dr Bernanke says there's still a question mark over whether the pick up will create the large number of jobs needed to make a bid dent in the unemployment rate.

Standard & Poors chief economist David Weiss says the comments indicate the Fed is no hurry to raise the cost of borrowing.

Most analysts do not a expect a move to raise rates until well into next year at the earliest.

The Fed meets next week. Financial markets are focussed on any signs it's inching toward raising borrowing costs or withdrawing the funds it's pumped into financial markets.

The BBC reports stocks rose modestly after the speech, but finished broadly flat, with the Dow Jones index closing 1 point higher at 10,390.

The Fed has cut interest rates to almost zero and has spent $US3 trillion on propping up the credit markets and trying to boost the economy.