USA: Federal Reserve Chairman Ben Bernanke says future economic setbacks possible

Record ID: 677303

  • Title: USA: Federal Reserve Chairman Ben Bernanke says future economic setbacks possible
  • Date: 27th November 2009
  • Summary: NEW YORK CITY, NEW YORK, UNITED STATES (FILE) (REUTERS) VARIOUS OF AN UNEMPLOYMENT OFFICE
  • Embargoed: 12th December 2009 12:00
  • Keywords:
  • Location: Usa
  • Country: USA
  • Topics: Economic News
  • Reuters ID: LVA6NEK8WNFY8WXZ59QLF2AFYJGL
  • Story Text: Federal Reserve Chairman Ben Bernanke said on Monday (November 16) that there are likely to be economic setbacks before the U.S. economic recovers.
    "The flow of credit remains constrained, economic activity weak and unemployment much too high. Future setbacks are possible," said Bernanke.
    Speaking at the Economic Club of New York Bernanke said he was concerned that the unemployment rate might be quite high by the end of 2010.
    "As net gains of roughly 100,000 jobs per month are needed just to absorb new entrants into the labor force, the unemployment rate likely will decline only slowly, if the economic growth remains moderate, as I expect," said Bernanke.
    The dollar has dropped about 16 percent against a basket of currencies since mid-March, when economic worries were running high, sending investors in search of safe havens.
    The Fed slashed U.S. short-term interest rates to near zero in December and has pledged to keep them ultra low for a prolonged period to support a weak recovery.
    Bernanke renewed that pledge but added that "significant changes" in economic conditions or the outlook could change the outlook for policy as well.
    Financial conditions have improved since a year ago, but major challenges remain and future setbacks are possible, Bernanke said. Tight bank credit and high unemployment are the chief headwinds facing the economy, according to the Fed Chairman.
    Bernanke finished his speech with a warning that while there is early evidence of an economic recovery, how it will proceed once government stimulus measures dry up is uncertain.
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