Federal Reserve chairman Ben Bernanke said Feb. 14 he sees "a period of sluggish growth" in the U.S. economy followed by acceleration later this year, helped by interest rate cuts and a stimulus plan. Speaking to a Senate panel, Bernanke reiterated that the central bank is "carefully evaluating" the economic situation and remains ready to act "in a timely manner" to guard against a downturn.
The remarks offered little new on the economic outlook but were the first by Bernanke since Congress approved and President George W. Bush signed a $168 billion economic stimulus plan. Bernanke told the Senate banking committee that the stimulus plan, which aims to boost consumer and business spending, would help lift economic growth later this year.
"At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt," Bernanke said, according to a copy of his remarks.The Fed chief, by repeating comments made in the Federal Open Market Committee statement last month, appeared to be indicating the central bank is open to further cuts in rates if needed to stave off a downward economic spiral.
The Fed has made a series of dramatic cuts in interest rates since September to bring the federal funds rate to 3% from 5.25%. The actions included an emergency three-fourths of a point cut on January 22 and another half-point reduction at its regular meeting a week later.
Bernanke essentially repeated the comments from the January 31 meeting and stated: "The FOMC will be carefully evaluating the incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks."
On inflation, Bernanke repeated the view that price pressure "should moderate from its recent rates, and the public's longer-term inflation expectations shoudl remain reasonably well anchored."
Copyright Agence France-Presse, 2008