Bernanke: Crisis to have long-lasting effects on U.S. economy

U.S. Federal Reserve Chairman Ben Bernanke said Tuesday the latest round of financial crisis will have profound and long-lasting impact on the United States in all dimensions. \"The crisis seems certain to have profound and long-lasting effects on our economy, our society, and our politics,\" Bernanke said in a speech in Boston, Massachusetts. \"More subtle, but of possibly great importance in the long run, will be the effects of the crisis on intellectual frameworks, including the ways in which economists analyze macroeconomic and financial phenomena,\" he noted. The central banker said the crisis has already influenced the theory and practice of modern central banking and no doubt will continue to do so. He defended his policies in tackling the \"historic event\", the financial crisis together with the associated deep recession. In dealing with the crisis, Bernanke led the Fed lowered the federal funds rate to almost zero level in December 2008 and has been keeping it so far. The central bank also launched two rounds of so called quantitative easing policy, meaning buying the government bonds to stimulate the economy. In September, the Fed announced to shift 400 billion dollars of its investments to try to lower long-term interest rates. That followed the Fed\'s announcement in August that it planned to keep short-term rates at record lows until at least mid-2013, assuming the economy remains weak. The Fed has been criticized by those who say keeping rates too low for too long could fuel higher inflation later. But Bernanke argued that the long-term inflation expectation remains low and central bankers should not only consider the traditional macroeconomic objectives -- typically sufficient employment and stable price, but also pay equal attention to financial stability. The crisis has brought the goal of financial stability into co- equal status with macroeconomic health as a central banking goal, elevating the importance of regulation to guard against systemic risks, Bernanke said. Many economists hold that the U.S. economy is on the slow recovery track and that it will take another three to five years for it to bottom out from this Great Recession which officially ended in June 2009.