Bernanke cautious on US economic recovery

Chairman of the US Federal Reserve, Ben Bernanke, is warning of continued fragility in the economy, with unemployment likely to stay high for the foreseeable future. This latest assessment has put the damper on hopes for an early hike in interest rates.

U.S. Federal Reserve Chairman Ben Bernanke says the shell-shocked U.S. economy in on the mend, but he warns the recovery is fragile and not a sure bet heading into 2010..

Ben Bernanke said "We still have some ways to go before we can be assured that the recovery will be self-sustaining."

In an address to the Economic Club of Washington Bernanke said the American economy still faces major hurdles.

Ben Bernanke said "The economy confronts some formidable headwinds that seem likely to keep the pace of expansion moderate. Despite the general improvement in financial conditions, credit remains tight for many borrowers, particularly bank-dependent borrowers such as households and small businesses. And the job market, though no longer contracting at the pace we saw in 2008 and earlier this year, remains weak."

Bernanke added that the US unemployment rate - now at 10 percent - may remain high for some time.

But overall, the Fed chief said the economy is moving in the right direction.

Ben Bernanke said "While economic forecasts are subject to great uncertainty, but my best guess at this point is that we will continue to see modest economic growth next year--sufficient to bring down the unemployment rate, but at a pace slower than we would like."

Analysts say Bernanke's comments suggest the central bank is in no hurry to reverse the massive monetary stimulus programs put in place at the height of the financial crisis.