USA: Federal Reserve Chairman Ben Bernanke tells U.S. Joint Economic Committee that moderate rebound in the U.S. economy is likely to keep interest rates low for a long time

Record ID: 751902

  • Title: USA: Federal Reserve Chairman Ben Bernanke tells U.S. Joint Economic Committee that moderate rebound in the U.S. economy is likely to keep interest rates low for a long time
  • Date: 15th April 2010
  • Summary: WASHINGTON, D.C., UNITED STATES (APRIL 14, 2010) (UNRESTRICTED POOL) WIDESHOT CHAIRMAN OF THE U.S. FEDERAL RESERVE BEN BERNANKE WIDESHOT BERNANKE SEATED BEFORE PANEL (SOUNDBITE) (English) CHAIRMAN OF THE U.S. FEDERAL RESERVE BEN BERNANKE, SAYING: "Well, the Federal Open Market Committee has stated freely that they currently anticipate that very low, extremely low rates
  • Embargoed: 30th April 2010 13:00
  • Keywords:
  • Location: Usa
  • Country: USA
  • Topics: Finance
  • Reuters ID: LVA7E069NJZB1S7HYCQO292IKUD1
  • Story Text: A moderate U.S. economic recovery is likely to warrant very low interest rates for a long time, Federal Reserve Chairman Ben Bernanke said on Wednesday (April 14).
    In congressional testimony that focused primarily on the barriers to continued growth, Bernanke argued inflation is not an immediate concern, giving the Fed room to maintain its highly stimulative policies.
    "The Federal Open Market Committee has stated clearly that they currently anticipate that very low, extremely low rates will be needed for an extended period," Bernanke said in response to questions from lawmakers of the Joint Economic Committee.
    However, he stressed that this commitment was based upon certain conditions in the economy, including underused productive capacity, high unemployment and anchored inflation expectations.
    Bernanke's outlook for the economic expansion was rather pessimistic. He said growth was still being weighed down by weakness in the construction sector and battered state and city budgets.
    "To be sure, significant restraints on the pace of the recovery remain, including weakness in both residential and nonresidential construction and the poor fiscal condition of many state and local governments," he said.
    The chairman did cite encouraging signs that layoffs are slowing and unemployment "has turned up." But overall, his comments still suggested some cautiousness about the recovery, despite data on Wednesday showing a sharp 1.6 percent increase in March retail sales.
    "Further economic expansion will depend on continued growth in private final demand," Bernanke said.
    In response to the most severe financial crisis since the Great Depression, the Fed cut interest rates essentially to zero and undertook a host of unconventional emergency measures to keep credit markets flowing.
    Despite those actions, the economy suffered its worst recession in more than 70 years, though things have been getting better recently, with U.S. gross domestic product surging 5.6 percent in the fourth quarter.
    Still, Bernanke said the labor market was hard hit by the recession and he was particularly concerned about the high rate of long-term joblessness.
    "A significant amount of time will be required to restore the 8-1/2 million jobs that were lost during the past two years," Bernanke said.
    Legislators asked several questions about China's exchange rate, an issue that has reemerged as a major talking point in Washington in the run-up to next week's G20 meeting.
    Asked whether the yuan, which many analysts see as undervalued, helped cause the worldwide recession, Bernanke said it was one of many factors.
    "I think it would be good for the Chinese to allow more flexibility in their exchange rate. It would give them more autonomy in their monetary policy so they could address inflation and bubbles within their own economy," he said.
    Other lawmakers focused on the issue of consumer protection, an area where the Fed is generally seen as having fallen short ahead of the crisis.
    Bernanke admitted some mistakes, suggesting he was not completely set on having those kinds of supervisory duties fall within the central bank's jurisdiction.
  • Copyright Holder: POOL (CAN SELL)
  • Copyright Notice: (c) Copyright Thomson Reuters 2011. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register