WASHINGTON — Federal Reserve Chairman Ben Bernanke on Wednesday acknowledged that the pace of economic growth is likely to be "frustratingly slow," after the Fed downgraded its forecast for the next two years.
Bernanke said the central bank is looking for growth and the job market to improve gradually over the next two years, but at a sluggish pace.
Bernanke cited the debt crisis in Europe as a particular concern. He said it could have adverse effects on confidence and growth. As a result, the central bank is closely monitoring the situation, he said.
When asked if the Fed would purchase more mortgage-backed securities to help the depressed housing market, Bernanke said that was a "viable option." But he declined to say if, or when, the Fed would pursue such action.
"We remain prepared to take action as appropriate to make sure the recovery continues," Bernanke said.
Bernanke's comments came at his third news conference this year, a practice he started in April to provide more background on the Fed's actions and its thinking behind its latest economic forecast.
The central bank's latest forecast released Wednesday predicts that the economy will grow no more than 1.7 percent for all of 2011. For 2012, growth will range between 2.5 percent and 2.9 percent. Both forecasts are roughly a full percentage point lower than the Fed's projections from June.
The unemployment rate has been stuck near 9 percent for more than two years. The Fed doesn't see that changing this year. It predicts it won't fall below 8.5 percent next year. In June, the Fed had predicted unemployment would drop to as low as 7.8 percent in 2011.
The new forecast takes into account the substantial slowdown in growth that occurred earlier this year.
Bernanke said he sympathized with Occupy Wall Street protesters complaints about the state of the economy.
"I am dissatisfied with the state of the economy," Bernanke said. "Unemployment is too high."
But the Fed chairman said criticism from Republicans, both in Congress and those running for president, was not valid. They have charged that the central bank's efforts have set the stage for higher inflation in the future.
Bernanke said he felt the central bank had a very good record on inflation. He said where the Fed has fallen short was in dealing with unemployment.
He declined to comment directly on a letter senior Republican leaders sent in September, which cautioned the central bank not to take further steps to lower interest rates.
At the September meeting, the Fed agreed to shuffle its portfolio to try and lower long-term interest rates.
"We listen to everybody's input," Bernanke said. "The most important thing is that we are free to make a decision based on the interest of the American people. That's what we are going to do."