Thursday, July 14, 2011

Bernanke dashes hopes for US stimulus

Federal Reserve Chairman Ben Bernanke

Source: Press TV

The Federal Reserve chairman says the central bank is "not prepared' to resume bond-buying, contradicting his previous remarks that the Fed could step in to support the US economy when it is needed.

Ben Bernanke had said on Wednesday the Fed could "step in to support the economy" through another round of quantitative easing, if the US economy would need it, but when he addressed the Senate Banking Committee on Thursday, he fine-tuned his remarks and said the central bank might not be as willing to move on further monetary stimulus, dpa reported.

US stocks fell on Thursday after Bernanke's remarks that inflation was "higher" and "closer" to the central bank's informal target than it was in August 2010, and that was a major reason why the Fed would not immediately embark on a third round of bond-buying.

Bernanke told Congress that monetary-policy makers wanted "to wait and see if the economy rebounds."

While the economy was in danger of stalling a year ago, with concerns about deflation, "today the situation is more complex," he said.

"We'd like to see if, in fact, the economy does pick up, as we are projecting," Bernanke said.

According to a report by the Financial Crisis Inquiry Commission, dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of the US economic crisis.

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