By IANS,
Washington : Growth in the US faces serious headwinds and the country’s high unemployment will linger for many years, said a senior Federal Reserve official Tuesday.
“Households are still deleveraging, corporations are reluctant to invest, and fiscal consolidation is needed over time to place public finances on a sustainable course,” said Janet L. Yellen, vice chair of the Fed.
“Despite some pickup in growth in the United States during the second half of the year, the outlook is for unemployment to diminish only slowly, remaining painfully high for many years to come.”
The US economy grew only 1.3 percent in the first half of 2011 before accelerating to 2.0 percent in the third quarter. But the modest pace is far from enough to lower the 9 percent unemployment rate, reported Xinhua.
Downside risks to global growth have increased significantly because of rising financial market pressures, reflecting an intensification of stress in European banking and sovereign debt markets as well as broader concerns about the outlook, Yellen said.
In order to boost growth and create jobs, the Fed has been keeping the key interest rate at a historic low level for almost three years. It has launched two rounds of government bonds buying program, known as the quantitative easing policy.
In the most recent case, the Fed started to shift the maturity date of its holdings of government securities, a policy to maintain the low interest rate environment.
She noted that monetary policy is “not a panacea”, and it is essential for other policymakers to also do their part. The Fed called for additional measures to spur the dysfunctional housing market, which triggered this round of financial crisis.