US Fed Chief warns on climbing deficit

Source: PressTV
http://www.presstv.ir/detail.aspx?id=123394§ionid=3510203


The US Federal Reserve chairman says the government needs a credible plan to address its gaping deficits in order to raise consumer confidence.

A realistic plan to reduce the massive fiscal imbalance could improve economic confidence while reducing long-term interest rates, said Ben Bernanke in a testimony before the Joint Economic Committee of the US Congress.

"Although sizable deficits are unavoidable in the near term, maintaining the confidence of the public and financial markets requires that policymakers move decisively to set the federal budget on a trajectory toward sustainable fiscal balance,” he said.

The Fed chief added that tackling the country's fiscal problems requires difficult choices, but delaying the action will only make matters worse.

The warning comes a day after the US Commerce Department said the country's trade deficit rose to around $40 billion in February.

Bernanke expressed particular concern about recent jobless data showing that 44% of the unemployed in March had been jobless for at least six months.

He said that a significant amount of time will be required to restore some 8.5 million jobs lost in the last two years.

Bernanke added that current projections show the government running an imbalance of 4 to 5 percent of the GDP through 2020, describing it as dangerous.