The United States economy should pick up in the second half of the year as the labor market gradually improves, the nation's top central banker said Tuesday in Atlanta.

Fed Chairman Ben Bernanke blamed a recent string of disappointing economic data on the transitory impact of high gas prices and the March earthquake in Japan.

In doing so, Bernanke gave no indication that the Fed will commit to a third round of quantitative easing. Instead, pent-up demand will help the economy recovery from a sluggish first half of 2011.

Making his first public comments following Friday's dismal jobs report, Bernanke acknowledged that unemployment remains unacceptably high. The struggling economy created only 54,000 jobs last month, despite unprecedented support from the Fed.

He urged Congress not to make significant near-term budget cuts, saying they risk derailing the recovery.

While lawmakers need to put the government's finances on a "sustainable trajectory," a sharp fiscal consolidation focused on the very near term could be "self-defeating if it were to undercut the still-fragile recovery," he warned.

Bernanke continued to downplay inflation, insisting that commodity prices are likely to return to more subdued levels in the medium term.

"So far at least, there is not much evidence that inflation is becoming broad-based or ingrained in our economy," he said, hinting the Fed is in no hurry to hike interest rates.

Over a 12-month span, inflation through April was 2.2 percent; excluding gasoline, it was 1.2 percent.

Bernanke dismissed criticism that the Fed's ultra-accommodative policy is the driving force behind this year's rapid increase in food and energy prices.

"Since February 2009, the trade-weighted dollar has fallen by about 15 percent," he noted.

"However, since February 2009, oil prices have risen 160 percent and nonfuel commodity prices are up by about 80 percent, implying that the dollar's decline can explain, at most, only a small part of the rise in oil and other commodity prices."

Bernanke reiterated the Fed's pledge to keep rate at effectively zero until the economy is on more solid footing.

"The (FOMC) continues to anticipate that economic conditions are likely to warrant exceptionally low levels for the federal funds rate for an extended period," Bernanke said.

"Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," he concluded.

Bernanke assured that policy makers will keep a close eye on consumer prices, and would respond appropriately if presented with evidence of broad-based inflation.

RTTNews