Bernanke hints at more rate cuts
US Federal Reserve chief Ben Bernanke has hinted that the central bank is prepared to cut interest rates further to help ease recession fears.In his semi-annual report to the US Congress, Mr Bernanke said the Fed would continue to “act in a timely manner as needed to support growth”.
Analysts said his comments increased the likelihood of another rate cut at the Fed’s next meeting on 18 March.
US interest rates are currently at 3% after two major reductions in January.
‘Distinctly less favourable’
Despite saying the Fed must continue to keep a close eye on inflation, Mr Bernanke said economic conditions had become “distinctly less favourable” and could get worse.
“The risks include the possibilities that the housing market or labour market may deteriorate more than is currently anticipated and that credit conditions may tighten substantially further,” he said.
Mr Bernanke’s downbeat comments are the latest in a series of warnings he has given this year about the health of the US economy.
Although he said inflation remained a worry, it is expected to go down as high energy and commodity prices recede.
“The key thing is that Bernanke is talking about providing adequate insurance against downside risk,” said analyst Firas Askari, of BM Capital Markets.
“This is a Fed that is poised to react to growth risks and I think they are probably doing the right thing in focusing on sluggish growth more than on inflation.
“They’re willing to inject more juice into the system, and that’s what they need to do.”
Story from BBC NEWS:
Bernanke is an idiot. All he is doing is simply increasing the risks of inflation while delaying an inevitable recession yet again. The more cuts he makes, the more intense the economic recession will be once the new President takes power in 2008. Both Jim Rogers and even Ron Paul were right about Bernanke.