Bernanke says U.S. needs faster growth

The U.S. economy needs to grow more quickly to bring the unemployment rate down further, Federal Reserve Chairman Ben Bernanke said on Monday, defending the central bank's policy of very low interest rates.

While he offered no indication the Fed is keen to embark on a third round of bond purchases, Bernanke also made clear the central bank is in no rush to reverse course after responding aggressively to a deep recession.

The jobless rate has dropped to 8.3 percent from 9.1 percent last summer, a move Bernanke said was "somewhat out of sync" with the rather modest pace of economic growth.

He said the decline could reflect an effort by businesses to recalibrate their payrolls after unusually heavy job cuts during the recession. If this is the case, he said, progress may stall.

"To the extent that this reversal has been complete, further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke told the National Association for Business Economics.

U.S. stocks climbed on hopes that Bernanke's speech could be a precursor to more Fed bond purchases, with each of the major indexes up at least 1 percent. The dollar fell against the euro, but prices for U.S. government debt also slipped as worries about Europe's debt crisis eased, sapping a safe-haven bid.

The U.S. central bank lowered overnight interest rates to near zero in December 2008 and has bought $2.3 trillion in debt securities to drive other borrowing costs lower in an effort to spur faster growth and cut unemployment.

"Reading between the lines, it sounds like he's pushing the ball forward toward having a discussion about doing more," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi, on the sidelines of the NABE conference.

After its last two meetings, the Fed said it would likely keep rates near zero at least through late 2014, but upbeat economic signs, including solid employment growth, have led investors to bet on a move as early as the middle of next year.

Bernanke's speech appeared aimed at pushing back against those expectations.