HIGHLIGHTS-Bernanke addresses National Press Club

(Adds Bernanke on higher food prices and emerging markets)

WASHINGTON, Feb 3 (Reuters) - The following are highlights from Federal
Reserve Chairman Ben Bernanke's speech to the National Press Club on Thursday.

> For a text of Bernanke's speech, see: [ID:nN03294808]

> For a story on the speech, see [ID:nN0354501]

> For other stories on Fed policy, see [FED/AHEAD]

ON HIGHER FOOD PRICES AND EMERGING MARKETS:

"Emerging markets are growing very quickly for a couple of reasons. One is
just the fact there has been a long-term trend for emerging markets to develop
very quickly and that on the whole is a very positive development because it
means that people who were in poverty are moving closer and closer to a more
middle class standard of living.

"But as people's diets are becoming more sophisticated and as they eat more
beef and less grains and so on, the demand for food and energy rise and that's
the primary long-term factor affecting the real price of commodities and food.

"Some of the emerging markets are facing inflationary pressures because
their own economies are growing perhaps even faster than their capacity.

"I think it's entirely unfair to attribute excess demand pressures in
emerging markets to U.S. monetary policy because emerging markets have all the
tools they need to address excess demand in those countries."

ON EMPLOYER WILLINGNESS TO HIRE:

"The economy has to grow about 2-1/2 percent in real terms just to
accommodate people coming into the work force so in order to keep the
unemployment rate constant we need about 2-1/2 percent growth. ... We were
looking at a situation in August where we thought the unemployment rate would
actually begin to rise again. ... Looking forward into 2011 we think it will be
above 2-1/2 percent and therefore we expect to see unemployment declining over
time. It's not as fast as we would like but on the other hand there is some
good news. Looking at the whole range of statistics on the labor market, the
sense is that employers are becoming more willing to hire and I think we'll
start seeing some stronger payroll reports and some lower unemployment rates
pretty soon."

ON DEBT LIMIT:

"This is a very serious matter, because under current law if the debt limit
is not extended for a time, the Treasury has various resources it can use to
make payment on the national debt. Beyond a certain point it would not have
those resources and the United States could conceivably, I think this is very
remote, but it's not something you want to play around with, the United States
would be forced into a position of defaulting on its debt. And the implications
of that on our financial system, our fiscal policy and our economy would be
catastrophic. I would very much urge Congress not to focus on the debt limit as
being the bargaining chip in this discussion, but rather to address directly
the spending and tax issues that we have to deal with in order to make progress
on this fiscal situation."

FROM Q&A SESSION:

ON STOCKS RISING IN CONNECTION TO QUANTITATIVE EASING:

"First, to be very clear, the purpose of monetary policy easing is not to
increase stock prices per se, the purpose is to strengthen the U.S. economy,
put people back to work, and create price stability. But, the way monetary
policy always works is through interest rates and asset prices -- that's how it
always works -- by changing those prices in financial markets. So yes, I do
think that by taking these securities out the markets and pushing investors
into alternative assets, we have led to higher stock prices and to lower stock
market volatility."

ON EFFECTS OF HIGHER PRICES FOR OIL, OTHER COMMODITIES:

"We pay very close attention to oil prices and other commodity prices
because they do present clearly two kinds of risks. The first is that higher
oil prices are kind of a tax. We are trying to stimulate the economy. We are
trying to get consumers to become more confident, be able to spend more, and to
help put people back to work. To the extent that part of their income gains are
drained away by higher gas prices, for example, that's going to be a negative,
that will slow the recovery. So, as international factors lead to higher oil
and commodity prices, that is definitely a negative from the perspective of
consumers and household budgets and economic growth.

ON ECONOMY IN "DEEP HOLE":

"We face a very challenging period ... we've had enormous problems, issues
with the financial markets, we've had instability, we've had to address those.
I believe we addressed them adequately in terms of stabilizing the system. Now
we have to implement a new set of laws, new set of rules to ensure we don't
have this kind of instability again."

"At the same time the economy, though it does look to be growing more
quickly, is still in a deep hole, is still very far from where we'd like to be
and we need to manage policy -- both monetary policy and fiscal policy -- to
try to put people back to work in way that is consistent with stability and in
particular with continuing low inflation."

ON THE FED HOLDING PRESS CONFERENCES:

"On press conferences, it has been a difficult decision. We thought about
it. On one hand, real time transparency is very important and valuable. On the
other hand, we don't want to create unnecessary uncertainty, unnecessary
volatility in financial markets by saying things that may be misinterpreted if
they are too ad hoc."

FROM SPEECH:

ON THE RECOVERY AND EMPLOYMENT:

"The economic recovery that began in the middle of 2009 appears to have
strengthened in recent months, although, to date, growth has not been fast
enough to bring about a significant improvement in the job market."

"Overall, ... improving household and business confidence, accommodative
monetary policy, and more-supportive financial conditions, including an
apparent increase in the willingness of banks to make loans, seems likely to
lead to a more rapid pace of economic recovery in 2011 than we saw last year.

"Recent data do provide some grounds for optimism on the employment front.
... Even so, with output growth likely to be moderate for awhile and with
employers reportedly still reluctant to add to their payrolls, it will be
several years before the unemployment rate has returned to a more normal level.
Until we see a sustained period of stronger job creation, we cannot consider
the recovery to be truly established."

ON INFLATION:

"We have recently seen significant increases in some highly visible prices,
notably for gasoline. Indeed, prices of many commodities have risen lately,
largely as a result of the very strong demand from fast-growing emerging market
economies, coupled, in some cases, with constraints on supply. Nevertheless,
overall inflation remains quite low."

ON THE FED'S POLICY MANDATE AND ITS ASSET PURCHASE PROGRAM:

"In sum, although economic growth will probably increase this year, we
expect the unemployment rate to remain stubbornly above, and inflation to
remain persistently below, the levels that Federal Reserve policymakers have
judged to be consistent over the longer term with our mandate from the Congress
to foster maximum employment and price stability."

"My colleagues and I have said that we will review the asset purchase
program regularly in light of incoming information and will adjust it as needed
to promote maximum employment and stable prices."

ON FISCAL STABILITY:

"To put the budget on a sustainable trajectory, policy actions--either
reductions in spending or increases in revenues or some combination of the
two--will have to be taken to eventually close these primary budget
gaps."

"Acting now to develop a credible program to reduce future deficits would
not only enhance economic growth and stability in the long run, but could also
yield substantial near-term benefits in terms of lower long-term interest rates
and increased consumer and business confidence."