Bernanke – Fed needs to consider whether current policy remains appropriate

08 October 2008

The Fed “will need to consider whether the current stance of policy remains appropriate”, Bernanke said and announced that “continued efforts to stabilize the financial markets are essential”.

Federal Reserve Chairman Ben Bernanke signalled that the US may lower it interest rates. The outlook for economic growth has worsened and the downside risks to growth have increased, he said. However, as the outlook for inflation has improved somewhat, the Fed “will need to consider whether the current stance of policy remains appropriate”, he said.

 

Bernanke warned that the financial crisis could prolong the weak economic outlook in the US. “Economic activity is likely to be subdued during the remainder of this year and into next year”, he said. “The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth.”

 

Bernanke, therefore, announced that “continued efforts to stabilize the financial markets are essential”.

 

Full speech

 

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