US unemployment rate to decline slowly: Bernanke

WASHINGTON -?US Federal Reserve Chairman Ben Bernanke said on Wednesday the nation's high unemployment rate was expected to edge down "only slowly" in 2012.

"The recovery of the US economy continues, but the pace of expansion has been uneven and modest by historical standards," the central bank chief said in a testimony before the Committee on Financial Services of US House of Representatives.

"We have seen some positive developments in the labor market. Private payroll employment has increased by 165,000 jobs per month on average since the middle of last year," Bernanke said in the Fed's Semiannual Monetary Policy Report to the Congress.

Looking beyond 2012, participants of the Federal Open Market Committee (FOMC), the Fed's monetary policy making body, predicted that US economic activity will pick up gradually as recovery challenges fade, supported by a continuation of the highly accommodative stance for monetary policy.

"Looking beyond this year, FOMC participants expect the unemployment rate to continue to edge down only slowly toward levels consistent with the Committee's statutory mandate," added Bernanke.

Household spending rose moderately in the second half of last year, boosted by a fourth-quarter surge in motor vehicle purchases that was bolstered by an easing of constraints on supply related to the earthquake in Japan.

"The fundamentals that support spending continue to be weak: Real household income and wealth were flat in 2011, and access to credit remained restricted for many potential borrowers. Consumer sentiment, which dropped sharply last summer, has since rebounded but remains relatively low," he cautioned.

The US housing market was weighed down by tight lending standards, uncertain prospects of home prices and consumers' concern of their anemic income growth, said Bernanke.

On the front of eurozone economy, the Fed chief noted that a number of constructive policy actions have been taken recently, but critical fiscal and financial challenges remained for the area.