NEW YORK (CNNMoney) — Reduction in the unemployment rate is “likely to be frustratingly slow,” Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee Tuesday morning.

Bernanke added that the Fed’s overall forecast shows unemployment still stuck above 7% or higher at the end of 2014. Bernanke was on Capitol Hill for his semi-annual monetary policy report to Congress.

Bernanke pointed to the problems in Europe as a major drag on U.S. growth. The other major drag was fiscal uncertainty coming from Congress.

Bernanke said the most effective way Congress could help support the economy right now would be to address the nation’s fiscal challenges in a way that won’t harm the recovery, but takes into account “long run sustainability” of the economy.

He said another episode like the chaotic debate over raising the debt ceiling was the sort of thing we needed to avoid this fall.

Bernanke noted concerns about U.S. economic growth, saying that after a 2.5% gain in gross domestic product for the second half of 2011, growth slowed to less than 2% in the first quarter of 2012, and he pointed to a “still smaller gain in the second quarter.”

The Fed Chairman also pointed to business spending, which has been trending down, and noted that other forward looking indicators of investment demand suggest further weakness ahead.

But the Fed Chairman had better news on inflation, saying that the lower price of oil has brought inflation down to a manageable level.

Bernanke was mildly positive about the housing sector, saying that new and existing housing sales have bee gradually trending upward since last summer.

But he noted the large number of vacant homes keeping supply elevated, and that while lending standards are tight, at the same time households are concerned about their jobs and finances, along with a number of households that are “underwater” on their mortgages, meaning they owe more than their houses are worth.