Federal Reserve Chairman Ben Bernanke said on Thursday that while the U.S. central bank's vast support for the economy will likely be needed for a while, the Fed must remove that help as the economy heals to ward off inflation.
Accommodative policies will likely be warranted for an extended period, he said in remarks prepared for delivery at a monetary policy conference at the Fed.
At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road.
Bernanke, in a detailed description of the bank's more-than-doubled balance sheet, said the Fed has the tools and the ability to pull back its flood of cash and loans to the economy and to raise interest rates when the time is right.
(Reporting by Mark Felsenthal; Editing by Leslie Adler)