The U.S. economy needs to grow stronger to address labor market problems, Federal Reserve Chairman Ben Bernanke said Monday, defending the Fed's policy to keep ultra-low interest rates.

"We have seen some positive signs on the jobs front recently, including a pickup in monthly payroll gains and a notable decline in the unemployment rate. That is good news," Bernanke said at a National Association for Business Economics conference.

While admitting that the substantial decline of the unemployment rate reflects "genuine improvement" in labor market conditions, Bernanke cautioned that positive signs on the job market were "somewhat out of sync" with the overall pace of economic growth.

The U.S. unemployment rate has dropped by 0.8 percent since last August and the private payroll employment increased by about 190,000 jobs per month, on average, over the past 12 months. However, the U.S. economy grew only at a rate of 1.7 percent last year, too modest to bring down the jobless rate.

Bernanke offered one explanation for such a puzzle, suggesting that the recent drop in the jobless rate could represent a catch-up from unusually heavy job losses during the recession when panicked businesses sharply cut jobs.

"To the extent that this reversal has been completed, 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 noted.

He also argued that cyclical rather than structural factors are likely the primary source for the increase in long-term unemployment, stressing that the accommodative monetary policies, by providing support for demand and for the economic recovery, should help to reduce long-term unemployment.