Can you handle the truth?
Economy Will Stay Sluggish, Bernanke Tells Congress
Chip Somodevilla/Getty Images
Ben S. Bernanke, chairman of the Federal Reserve, testified before the Senate Banking Committee in Washington on Tuesday.
|
|
Related
Scramble Led to Rescue Plan on Mortgages (July 15, 2008)
Live Video: Bernanke Testimony (via MSNBC)
In prepared testimony at the Senate Banking Committee, Mr. Bernanke avoided the word “recession” in characterizing the current economy, noting instead that consumer spending and exports were keeping growth “at a sluggish pace” while the housing sector “continues to weaken.”
“The economy has continued to expand, but at a subdued pace,” Mr. Bernanke said. But he added that spending for personal goods had “advanced at a modest pace so far this year, generally holding up somewhat better than might have been expected given the array of forces weighing on household finances and attitudes.” Call THE SUPERIOR GOLD GROUP today and acquire precious metals ie; Silver,Gold,Platinum,Pallidium, for asset diversification and preservation of your personal wealth at 888-969-6465. Make certain you secure your future NOW! 888-969-6465
He said that while the risks to the overall economy were still “skewed to the downside,” inflation “seems likely to move temporarily higher in the near term.” The Fed, Mr. Bernanke said, needed to guard against higher prices spreading throughout the economy.
This mixed assessment appeared to signal that the Fed would not be lowering interest rates further in spite of the economic sluggishness, as it did earlier this year, out of concern that lower rates would spur more inflation. In June, the Fed declined to lower rates and instead suggested it might raise rates later in the year.
Mr. Bernanke was especially pessimistic about any easing of energy prices, dismissing suggestions that they were being driven by speculation in futures markets. Instead, he said high energy costs reflected the markets’ recognition that demand was outstripping supplies.
“Over the past several years, the world economy has expanded at its fastest pace in decades, leading to substantial increases in the demand for oil,” Mr. Bernanke said. “On the supply side, despite sharp increases in prices, the production of oil has risen only slightly in the past few years.”Call THE SUPERIOR GOLD GROUP today and acquire precious metals ie; Silver,Gold,Platinum,Pallidium, for asset diversification and preservation of your personal wealth at 888-969-6465. Make certain you secure your future NOW! 888-969-6465
Before Mr. Bernanke remarks, the Labor Department reported that wholesale prices had risen 1.8 percent in June, meaning that inflation rose in the 12 months at its fastest pace in more than a quarter-century.Since the economic downturn and initial credit crises of last summer, Mr. Bernanke’s words have been watched carefully, especially when he gives his semiannual briefing to the Congressional committees that handle the economy.
But the Fed chief’s testimony on Tuesday came at an unusually turbulent time in financial markets, since it followed on the heels of the Fed’s announcement that it would temporarily open its discount window to the two troubled mortgage giants, Fannie Mae and Freddie Mac.
The actions to stabilize Fannie and Freddie occurred over the weekend as the Treasury secretary, Henry M. Paulson Jr., also called for Congress to approve emergency legislation giving the federal government power to inject billions of federal funds through investments and loans.
The actions announced Sunday echoed similar actions in mid-March, when the Fed moved to avert a financial collapse of the investment bank Bear Stearns by offering an emergency loan to facilitate its sale to JPMorgan Chase. At the same time, the Fed set up emergency lending facilities for major investment banks hit by the credit crunch.
“These steps to address liquidity pressures coupled with monetary easing seem to have been helpful in mitigating some market strains,” Mr. Bernanke said. But despite the “positive effects” of the Fed’s actions, he said that the problems of unstable markets continued because of “declining house prices, a softening labor market and rising prices of oil, food and some other commodities.”
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment