Bernanke says low interest rate to stay; worried over jobs

The US central bank chief Ben Bernanke has said interest rates will remain at their current levels for an extended period, without specifying how long they will continue at their record lows.

In a testimony before the House Financial Services Committee yesterday, Federal Reserve chairman Ben Bernanke said that the government action has helped start an economic recovery, but that he is worried about the state of the job market.

''Of particular concern, because of its long-term implications for workers' skills and wages, is the increasing incidence of long-term unemployment; indeed, more than 40 per cent of the unemployed have been out of work six months or more, nearly double the share of a year ago," Bernanke noted.

Last week, the Fed surprised financial markets by increasing the discount rate - which is a rate for emergency loans to banks, to 0.75 per cent from 0.50 per cent, but kept the funds rate at the record low target of between zero and 0.25 per cent.

The Fed has been keeping the funds rate at this level since December 2008.

"The Federal Open Market Committee continues to anticipate that economic conditions - including low rates of resource utilisation, subdued inflation trends, and stable inflation expectations - are likely to warrant exceptionally low levels of the federal funds rate for an extended period," he said.