|  | | 2010 News and Press Releases | | |
HEADLINE NEWS:
Bernanke Says Fed Would Act If Necessary To Boost Economy
Neil Irwin
The Washington Post. July 21, 2010
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EXCERPT: The Federal Reserve would take action if necessary to keep the economic recovery on track, its chairman, Ben S. Bernanke, said Wednesday. Yet he expressed confidence that the expansion continues. It was the first public acknowledgment by Bernanke that the agency could take more policy steps if the economic recovery continues to disappoint. In his semi-annual testimony on monetary policy to the Senate Banking Committee, he gave a dual message: cautious optimism about growth and recognition that risks that the recovery will falter have risen in recent months. Even as the Fed continues "prudent planning" for how to exit its steps to support the economy, "we also recognize that the economic outlook remains unusually uncertain," Bernanke said in prepared testimony. "We remain prepared to take further policy actions as needed to foster a return to full utilization of our nation's productive potential in a context of price stability." Bernanke did not say what policy actions he had in mind, but potential steps include cutting the interest rate paid on bank reserves, reaffirming the Fed's promise to keep short-term interest rates low for the foreseeable future, or buying enough mortgage securities to replace those that are paid off. If the economy appeared at serious risk of returning to a recession, the Fed would consider large-scale purchases of Treasury bonds or mortgage-related securities to try to head off another crisis. |
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