A cheerleader for continued monetary stimulus for the US economy, Federal Reserve Chairman Ben Bernanke says the central bank will keep buying bonds, by printing money.
Bernanke told members of Congress that he is aware of the potential risks of inflation, but it’s more important to promote a stronger economic recovery and more rapid job creation: “In the current economic environment, the benefits of asset purchases and of policy accommodation more generally, are clear. Monetary policy is providing important support to the recovery. Notably, keeping longer-term interest rates low has helped spark recovery in the housing market. “
Housing is expected to underpin US growth this year.
The sector is no longer a drag on the economy; home building added to growth last year for the first time since 2005 and sales of previously owned homes approached a near three-year high last month.
David Blitzer of the Index Committee with S&P Dow Jones Indices said: “This has really become one of the hot leading spots in the economic recovery. Big contribution to GDP in the 3rd and 4th quarters of last year. If we look across the numbers for the full year 2012 for home prices- very strong.”
There were further signs of the start of a recovery in the US housing market as sales of new single-family homes jumped to a four and a half year high in January and the world’s largest DIY chain, Home Depot, posted better-than-expected earnings.