Belfast Telegraph

Tuesday 29 July 2014

Bernanke snubs US stimulus calls

Ben Bernanke

US Federal Reserve chairman Ben Bernanke is proposing no new steps by the Fed to boost the economy while hinting that Congress may need to act to stimulate employment and growth.

Mr Bernanke, speaking at an annual economic conference in Jackson Hole, Wyoming, said that while record-low interest rates will promote growth over time, the weak economy requires further help in the short run.

His speech follows news that the economy grew at an annual rate of just 1% this spring and 0.7% for the first six months of the year. Only slightly healthier expansion is foreseen for the second half.

Mr Bernanke said he is optimistic that the job market and the economy will return to full health in the long run.

Stocks fell after the speech was released. The Dow Jones had been down about 78 points, or about 0.7%, in early trading on Friday but the loss quickly extended to 145 points.

Mr Bernanke left open the possibility that the Fed will take further steps to strengthen the economy. He said its September meeting will be held over two days instead of just one.

He said long-term deficit reduction is necessary but emphasised that future economic health could be jeopardised if hiring and growth are not strengthened now.

"Fiscal policymakers should not ... disregard the fragility of the current economic recovery," he said.

Mr Bernanke was also critical of Congress's handling of this summer's battle over raising the debt ceiling. He said it disrupted the economy, and another episode like it could have long-term negative consequences.

His speech comes at a critical moment for the economy, with some economists worried that another recession might be near.

Latest News

Latest Sport

Latest Showbiz