Bernanke’s got nothing
JACKSON HOLE, Wyo. (AP) — Federal Reserve Chairman Ben Bernanke signaled Friday that Congress must do more to promote growth, or risk delaying the economy’s return to full health.
Bernanke proposed no new steps by the Fed to boost the economy. But at a time when Congress has been focused on shrinking long-run budget deficits, he warned lawmakers not to “disregard the fragility of the current economic recovery.”
Bernanke, who spoke at an annual economic conference in Jackson Hole, said that record-low interest rates will promote growth over time.
His speech follows news that the economy grew at an annual rate of just 1 percent this spring and 0.7 percent for the first six months of the year. Only slightly healthier expansion is foreseen for the second half.
Bernanke said he’s optimistic that the job market and the economy will return to full health in the long run.
Stocks fell after the speech was released but then recovered. The Dow rose slightly in midmorning trading.
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 to allow for a “fuller discussion” and that the Fed “is prepared to employ its tools as appropriate to promote a stronger economic recovery.”
A plan Congress passed this month means annual deficits are expected to be reduced by $3.3 trillion over the next decade through spending cuts.
The Fed chairman said long-term deficit reduction is necessary. But he said that future economic health could be jeopardized if hiring and growth are not strengthened now.
Bernanke also was critical of Congress’ handling of this summer’s battle over raising the debt ceiling. He said it disrupted the economy and that a similar episode could hurt it in the future.
Analysts noted the lack of new proposals in Bernanke’s speech. source – YahooNews