Bernanke offers no new Fed measures
Source: Agencies |
August 27, 2011, Saturday
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Print Edition
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FEDERAL Reserve Chairman Ben Bernanke is proposing no new steps to boost the United States economy while hinting that Congress may need to act to stimulate hiring and growth.
Bernanke said yesterday that while record-low interest rates will promote growth over time, the weak economy requires further help in the short run. He was speaking at an annual economic conference in Jackson Hole, Wyoming.
His speech followed news that the US economy grew at an annual rate of just 1 percent this spring and 0.7 percent for the first six months of this year. Only slightly healthier expansion is foreseen for the second half.
Bernanke said he's optimistic that the job market and the economy will return to full health in the long run.
In his speech, Bernanke left open the possibility that the Fed will take further steps to strengthen the economy. He said its September meeting will be held over two days instead of just one to allow for a "fuller discussion" and that the Fed "is prepared to employ its tools as appropriate to promote a stronger economic recovery."
Congress has been focused on shrinking budget deficits and is unlikely to back any new spending to try to energize the economy. A plan lawmakers passed this month means annual deficits are expected to be reduced by US$3.3 trillion over the next decade through spending cuts.
The Fed chairman said long-term deficit reduction is necessary. But he emphasized that future economic health could be jeopardized if hiring and growth are not strengthened now. "Fiscal policymakers should not ... disregard the fragility of the current economic recovery."
Analysts noted the lack of new proposals in Bernanke's speech. "He essentially hit the ball over to fiscal authorities and said: 'There's only so much we can do,'" said Aneta Markowska, senior US economist at Societe Generale.
But she said the extension of the Fed's September meeting to two days might suggest something new could be unveiled.
Bernanke's speech comes at a critical moment for the US economy. Some economists worry that another recession might be near. A big reason is consumer spending has slowed. Home prices are depressed. Workers' pay is barely rising and household debt loads remain high.
Bernanke said yesterday that while record-low interest rates will promote growth over time, the weak economy requires further help in the short run. He was speaking at an annual economic conference in Jackson Hole, Wyoming.
His speech followed news that the US economy grew at an annual rate of just 1 percent this spring and 0.7 percent for the first six months of this year. Only slightly healthier expansion is foreseen for the second half.
Bernanke said he's optimistic that the job market and the economy will return to full health in the long run.
In his speech, Bernanke left open the possibility that the Fed will take further steps to strengthen the economy. He said its September meeting will be held over two days instead of just one to allow for a "fuller discussion" and that the Fed "is prepared to employ its tools as appropriate to promote a stronger economic recovery."
Congress has been focused on shrinking budget deficits and is unlikely to back any new spending to try to energize the economy. A plan lawmakers passed this month means annual deficits are expected to be reduced by US$3.3 trillion over the next decade through spending cuts.
The Fed chairman said long-term deficit reduction is necessary. But he emphasized that future economic health could be jeopardized if hiring and growth are not strengthened now. "Fiscal policymakers should not ... disregard the fragility of the current economic recovery."
Analysts noted the lack of new proposals in Bernanke's speech. "He essentially hit the ball over to fiscal authorities and said: 'There's only so much we can do,'" said Aneta Markowska, senior US economist at Societe Generale.
But she said the extension of the Fed's September meeting to two days might suggest something new could be unveiled.
Bernanke's speech comes at a critical moment for the US economy. Some economists worry that another recession might be near. A big reason is consumer spending has slowed. Home prices are depressed. Workers' pay is barely rising and household debt loads remain high.
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