Federal Reserve Board Chairman Ben Bernanke discussed the long-term unemployed,...

Federal Reserve Board Chairman Ben Bernanke discussed the long-term unemployed, indications of a "notable" drop in unemployment and hopes that lower interest rates should lead to decreased joblessness duringa meeting of the National Association for Business Economics in Arlington, Va. (March 26, 2012) Credit: Getty Images

Federal Reserve Chairman Ben Bernanke says the U.S. job market remains weak despite three months of strong hiring and that the Fed's existing policies will help boost economic growth.

Bernanke's comments Monday to a group of economists in Arlington, Va., drove stocks higher. Many took his cautious words about the economy to mean the Fed is likely to stick to its plan to hold short-term interest rates at record lows through 2014.

Though the hiring has helped support consumer confidence and incomes, "we have not seen that in a persuasive way yet," Bernanke said. The Fed needs to "remain cautious" in deciding what its next moves should be, he said.

Further job gains will likely require stronger consumer and business demand, Bernanke said at the National Association for Business Economics conference. The association includes about 2,500 economists for corporations, universities, the government and trade associations. After he spoke, the Dow settled at 13,241.63, up 160 points, its third-biggest gain of the year. Broader indexes also gained.

The gains in hiring since December had led some economists to predict that the Fed might consider raising rates earlier than it planned. But many took Bernanke's cautious tone Monday as a firmer commitment to the late-2014 timetable.

And some viewed the speech as a signal that the Fed might take further steps, if the economy falters, to try to further drive down long-term borrowing rates. The goal would be to encourage more consumer and business spending.

"The chairman is very much keeping additional monetary policy options on the table," said conference attendee Robert Dye, chief economist at Dallas-based Comerica Bank.

Employers added an average of 245,000 jobs a month from December through February. The unemployment rate has fallen nearly a full percentage point since summer, to 8.3 percent.

Still, the economy grew at an annual pace of just 3 percent in the October-December quarter. And economists think growth slowed in the January-March quarter to around a 2 percent annual rate.

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