The housing market remains "depressed" and the Federal Reserve Board will continue to keep interest rates low for an extended period of time, Fed chairman Ben Bernanke said.
The Fed chief noted that the economy recovery is moving at a "moderate pace with some accelerated growth" expected in 2012.
He made these remarks at a press conference Wednesday afternoon following a two-day meeting of the Fed's monetary policy committee. It is the first press conference following a Federal Open Market Committee meeting in Fed history.
Job growth is crucial for a recovery in the housing market, but committee members see a relatively slow reduction in the unemployment rate this year. FOMC members project the unemployment rate will be around 8.4% to 8.7% by yearend. The Labor Department recently reported the unemployment rate was 8.8% in March.
Bernanke noted that labor market is improving but it is not in "good shape." He pointed out that 45% of unemployed persons have been out of work for more than six months.
The committee members lowered the projections of gross domestic product to a range of 3.1% to 3.3% this year—down from a range 3.4% to 3.9% projected at the committee's January meeting.
Bernanke said the unexpected slowdown in the first quarter growth, partially due to lower construction activity and transitory factors, caused the downward revision in GDP.
