Focus on growth, not deficit: Fed

Federal Reserve chairman Ben Bernanke kept to his message of caution on Tuesday, warning a Senate panel that sharp spending cuts and tax increases scheduled to take effect in early 2013 could slow the nation’s economic recovery if federal officials do not take further action.

Federal Reserve chairman Ben Bernanke kept to his message of caution on Tuesday, warning a Senate panel that sharp spending cuts and tax increases scheduled to take effect in early 2013 could slow the nation’s economic recovery if federal officials do not take further action.

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Despite the recent upturn in the job market, Bernanke said while testifying before the senate budget committee, “the pace of the recovery has been frustratingly slow.” He cautioned lawmakers not to impede near-term growth in the name of cutting the long-term deficit.

In his testimony, Bernanke repeated his modestly optimistic outlook for 2012, saying that Fed officials “expect somewhat stronger growth this year than in 2011.”

According to the labour department’s monthly unemployment report, the US added 243,000 jobs in January, bringing the jobless rate down to 8.3%, defying forecasts.

But the Fed chief continued to stress that a sharp, immediate push to reduce the deficit could harm the recovery in the upcoming months.

In Exclusive Partnership with The Washington Post.