Fed Head Acknowledges Risk

Federal Reserve chairman Ben Bernanke told the Women in Housing and Finance and Exchequer Club today that the U.S. Central bank is prepared to act aggressively to help stem problems caused by the recent housing slump and strains on the credit markets that are putting economic growth at risk.
 
Many analysts who fear that the United States is headed for a recession, reacted positively to the Fed chairman’s remarks and his public acknowledgement that the economy may indeed be in trouble.
 
Bernanke commented that policy makers are now more worried about sustaining economic growth than they are about inflation and pointed to rising oil prices, lower stock prices and falling home values as drivers for hurting consumer spending over the next year.
 
The Federal Open Market Committee, the Fed’s policy setting body, will hold a two-day meeting January 29-30.  Bernanke’s comments today reinforced expectations that rates will be cut by a half percentage point.

 

Laurie Berman, Senior Vice President, lberman@pondel.com
 
 

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