Bernanke leaves door open to another rate cut
WASHINGTON —
Warning that financial markets remain under “severe manner,” Federal Reserve Chairman Ben Bernanke pledged Friday to work closely by other central banks to fix global monetary problems and left open the door to a fresh interest defame divide to help brace the declining U.S. economy.
“The continuing volatility of markets and recent indicators of economic performance confirm that challenges remain,” Bernanke said in remarks prepared for a central banking conference in Frankfurt, Germany. “For this reason, policymakers will remain in close contact, monitor developments closely and fix ready to engage additional steps should conditions support.”
The Fed chief’s remarks appeared to reinforce the view of Wall Street investors and economists that the Fed probably will lower interest rates again attached Dec. 16, its last regularly scheduled meeting this year. The Fed’session guide rate is now at 1 percent.
Although the Fed has ratcheted down rates and taken a flurry of unprecedented actions to arrest the worst pecuniary since the Great Depression, profound problems remain. Credit is still not fluent normally in the U.S. and overseas, hobbling not only the domestic economy but-end also the global economy, which many give credit to is edging toward recession.
Bernanke’s remarks come as President George W. Bush and other world leaders descend on Washington because an extraordinary vertex to pry into options for economic relief and develop plans to prevent a repeat of the type of housing, credit and financial crises now endangering the nature economy.
The epic proportions of the current monetary crisis and the global economic slowdown has been an occasion for unprecedented international policy coordination, Bernanke said.
Most notably, the Fed and other major central banks on Oct. 8 joined together to slash interest rates, the first coordinated action of this type in the Fed’s history. “The coordinated rate cut was intended to send a able to endure signal to the public and to markets of our resolve to act together to address global economic challenges,” Bernanke reported.
The Fed also has set up new programs to fill up billions of dollars to other central banks - in swap for those countries’ currencies - to help ease heavy make necessary because dollars in many countries.
“The recent sharp degradation in conditions in funding markets left some participants outside the U.S. without adequate paroxysm to short-term dollar financing,” Bernanke explained.
In mid-October, the Fed eliminated limits on the sizes of these so-called “swap” arrangements with the European Central Bank, the Bank of England, the Bank of Japan and Switzerland’session central bank.
Although these and the central banks’ other actions have helped ease more stresses, financial markets remain under “severe sprain,” Bernanke aforesaid.
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