The U.S. economy is on track for a recovery later this year, but the pickup is likely to be sluggish and the jobless rate is likely to rise further, Federal Reserve Chairman Ben Bernanke said on Tuesday.
We expect economic activity to bottom out, then to turn up later this year, he said in testimony prepared for delivery to the congressional Joint Economic Committee.
Bernanke said the expected recovery will only gradually gain steam and that the economy would grow below its longer-run potential for a while. He also cautioned that recovery could be derailed by a relapse of financial strains.
Businesses are likely to be cautious about hiring, implying that that the unemployment rate could remain high for a time, even after economic growth resumes, he said.
(Reporting by Mark Felsenthal and Alister Bull; Editing by Andrea Ricci)