Bernanke Says Fed to Monitor Dollar

Updated to include further detail from the Fed Chairman's speech and Q&A session Monday.

NEW YORK (TheStreet) -- Federal Reserve Chairman Ben Bernanke said the Fed would monitor the weakening U.S. dollar "closely," but reiterated that the central bank's twin mandate of maximum employment and inflation prevention remained on its front burners.

"We are attentive to the implications of changes in the value of the dollar and will continue to formulate policy to guard against risks to our dual mandate to foster both maximum employment and price stability," Bernanke said Monday afternoon. "Our commitment to our dual objectives, together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong and a source of global financial stability."

The Fed chief made his remarks in a speech to the Economic Club of New York. Comments about the greenback are typically in the bailiwick of the Treasury Department, but the recent pressure on the dollar, which has lifted commodities prices sharply higher in recent weeks, has been an area of focus among market participants.

Most Popular Today

Apple's Decade: In Position to Win

Most Commented Today

Obama Bows to China: Today's Outrage

Still, Bernanke said that because resource slack in the economy remains high, "inflation seems likely to remain subdued for some time." For that reason, the Fed will keep interest rates at their historically low levels "for an extended period," he said, reiterating a phrase the central bank has used since the crisis began.

Ben Bernanke

As for the labor market, Bernanke noted that the economy needs to create 100,000 jobs each month just to account for the young people who are entering the labor force for the first time. Thus, the unemployment rate next year will decline slowly "if economic growth remains moderate, as I expect," he said.