Bernanke to tell Congress has eyes on growth risks
Written on February 25, 2008
Housing’s in the tank, banks are scared to lend, but oil is at $100 a barrel and inflation is threatening to pick up — what’s a central banker to do?
Federal Reserve Chairman Ben Bernanke will deploy his most reassuring bedside manner in congressional testimony on Wednesday and Thursday to explain how the U.S. central bank, which has already cut interest rates 2-1/4 percentage points since mid-September, can trim them further to prevent recession without letting inflation get out of hand.
“Near-term, the economy remains extremely vulnerable to further contraction because business sentiment has deteriorated further and the aggressive Fed easing to date has been partially offset by tighter financial conditions,” Deutsche Bank economists wrote in a note to clients. “This means the Fed is going to have to cut rates further, which is the message Mr same day payday loans. Bernanke will deliver.”
Financial markets place a 92 percent chance of a half-point cut in benchmark rates at the Fed’s next meeting on March 18, as implied by short-term interest-rate futures. Bernanke’s testimony on the central bank’s semiannual report on monetary policy and the economy will be closely scrutinized for clues on whether those bets are on the mark.
INFLATION UNEASE
Worried that financial turmoil would undercut an already weak economy, the Fed chopped rates by three-quarters of a point in an emergency move on January 22, just eight days before a regularly scheduled meeting.
Filed in: money.