I Get By With Alittle Help From My Friends....
Would you like to react to this message? Create an account in a few clicks or log in to continue.
I Get By With Alittle Help From My Friends....

Dinar Outcast


You are not connected. Please login or register

Bernanke pledges Fed support, but notes limits

Go down  Message [Page 1 of 1]

gente

gente

http://finance.yahoo.com/news/Bernanke-Fed-will-weigh-new-cnnm-3692232397.html?x=0&sec=topStories&pos=main&asset=&ccode=


Bernanke pledges Fed support, but notes limits


cnnmoney



Chris Isidore, On Friday August 26, 2011, 10:32 am

Federal Reserve Chairman Ben Bernanke said Friday that central bank policymakers will take a closer look next month on whether they should take additional short-term steps to jumpstart economic growth.

In a much-anticipated speech to leading economists in Jackson Hole, Wyoming, the chairman announced that a one-day meeting of the Fed, originally set for Sept. 20, is being expanded to two days "to allow a fuller discussion" of what the central bank should do to respond to "disappointing" growth.

"The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment," he promised.

But Bernanke gave few specifics -- and the speech was notable for its limited discussion of monetary policy.

That lack of specifics disappointed investors: Stocks fell sharply, with the Dow Jones industrial average losing 200 points immediately following the remarks.

Bernanke also cautioned the Fed's powers are somewhat limited, and said that much of the responsibility for action will have to lay with a gridlocked Congress.

"Most of the economic policies that support robust economic growth in the long run are outside the province of the central bank," he said.

And he warned that when Congress weighs future deficit reduction plans, it should be careful to not hurt the economy in the short-term. They "should not...disregard the fragility of the current economic recovery."

He said there needs to be a better way of Congress making decisions on taxes and spending. And he said a repeat of the this summer's contentious debate over raising the debt ceiling would likely hurt the economy.

"It is difficult to judge by how much these developments have affected economic activity thus far," he said about the threat of default and the downgrade of the U.S. credit rating. "But there seems little doubt that they have hurt household and business confidence and that they pose ongoing risks to growth."

Still, the Fed chairman, a leading expert on the Great Depression, said that he was confident the Great Recession and the financial crisis had not done permanent damage to the U.S. economy. In a surprisingly upbeat assessment, he said that despite current weakness, he is confident that strong hiring and growth should eventually return -- as long as policymakers take the right steps.

"Although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years," he said, although a return to more typical growth and unemployment levels "may take some time."

At his speech in Jackson Hole a year ago, Bernanke signaled the likelihood that the central bank would buy additional Treasuries, partly in an effort to pump money into the economy and spur growth. The day after the November election the Fed unveiled its plans to buy $600 billion in those assets by June of this year.

The stock market loved that plan, with the Standard & Poor's 500 shooting up 30% between the speech and a peak in May. The economy also showed signs of life, with employers hiring at a strong pace and unemployment falling in the spring of this year.

But the asset purchases also sparked criticism of the Fed, from foreign finance ministers, some leading Republican and even some members of the Fed. Critics blamed it for a variety of ills, including the decline of the dollar and rising prices, most notably oil and food.

But recently the U.S. economy has slowed dramatically. Friday morning before the speech the Commerce Department reported that gross domestic product, the broadest measure of the nation's economic health, grew only 1% in the second quarter, weaker than previously estimated. Hiring, consumer spending, manufacturing and housing have also been weak in recent readings.

All that has raised fears of a double-dip recession. The stock market has fallen sharply on those fears.

At its June meeting, the Fed cut its outlook for economic growth the rest of this year and into next year. In August its statement gave a gloomier outlook, and a divided Fed announced it would keep interest rates exceptionally low until at least the middle of 2013. It also said it is prepared to adjust its asset holdings as appropriate.

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum