Closely Monitor
Inflation is likely to remain low through 2013, Bernanke, 57, a former Princeton University economist, said in Senate testimony yesterday.
"We will continue to monitor these developments closely and are prepared to respond as necessary to best support the ongoing recovery in a context of price stability," he said.
At the same time, the labor market "has improved only slowly," and it may take "several years" for the unemployment rate to reach a "more normal level," he said. "The housing sector remains exceptionally weak," and "slow wage growth" is keeping labor costs in check, he said.
A report yesterday showed U.S. manufacturing accelerated in February to the fastest pace since May 2004. The Tempe, Arizona- based Institute for Supply Management's factory index increased to 61.4 from 60.8 a month earlier. Readings greater than 50 signal growth.
The Fed's preferred price gauge, which excludes food and fuel, rose 0.8 percent in January from a year earlier, matching December's year-over-year gain, the lowest in five decades of record-keeping. Fed officials aim for long-run overall inflation of 1.6 percent to 2 percent.