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Bernanke: 6% unemployment still years away

Unemployment probably won't reach the 6 percent level until 2016, Federal Reserve Chairman Ben Bernanke told Congress on Wednesday.

Bernanke, who is delivering a second day of testimony on Capitol Hill, continued to defend the central bank's easy monetary policy and warned Congress against letting looming spending cuts take place.

"There still seems to be quite a bit of unused resources, people that could be working, capital that could be used and is not being used," Bernanke said of the economy. "We believe the monetary policies that we've conducted have helped get stronger recovery and more jobs than we otherwise would have had."

Bernanke said that based on Fed estimates, "we've helped create many private sector jobs, government jobs to support the economy quite significantly."

With the jobless rate in January at 7.9 percent, Bernanke said his "reasonable guess" would be that it will take three more years before the unemployment rate reaches 6 percent. Late last year, the Federal Reserve said it would keep interest rates low until unemployment reached about 6.5 percent.

Bernanke also sees little risk of a spike in interest rates in the near term but did warn of the potential economic damage from the automatic spending cuts that go into effect on Friday.

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The Fed chairman advocated a gradual approach to dealing with the country's fiscal problems. "The more gradual this is, as long as there is offsetting changes in the further horizon, the less the immediate impact will be on jobs and growth in this recovery in 2013," he said.

"I think there is some cost to the economy of these repeated, I won't say 'crises,' but these repeated episodes where Congress is unable to come to some agreement and therefore some automatic thing kicks in, I think that's on the whole not a good thing for confidence."