While the Federal Reserve Chairman's comments were nothing new, they seemed perfectly timed to coincide with the first meeting of the 12-member bipartisan debt super committee Thursday.
"While prompt and decisive action to put the federal government's finances on a sustainable trajectory is urgently needed, fiscal policymakers should not, as a consequence, disregard the fragility of the economic recovery," Bernanke said in a speech in Minneapolis.
Bernanke has long urged lawmakers to bring the government's finances under control and rein in spending -- but over the long-term. In the short-term, he cautioned against massive government cuts that could squelch the already sluggish recovery.
"Fortunately, the two goals--achieving fiscal sustainability...and avoiding creation of fiscal headwinds for the recovery--are not incompatible," he said.
Reiterating his comments from a speech in Jackson Hole, Wy. two weeks ago, Bernanke also said the Federal Reserve stands ready to act if needed. "The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment," he said, repeating that sentence word-for-word from the Jackson Hole speech.
But he fell short of hinting of any specific measures.
0:00 / 3:54 Obama's uneven track record on jobs
"The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus," he said.
The Fed's policymaking committee is next scheduled to meet Sept. 20 and 21. That two-day meeting was originally slated to last for one day. Economists who closely watch the central bank speculate that the Fed may use the extra day to consider a stimulus measure known as Operation Twist.
Under such a policy, the Fed would replace some of the short-term bonds already on its balance sheet, with longer-term Treasuries. The controversial move, last done in the 1960s, is meant to encourage lending and borrowing by bringing long-term interest rates down.
It's called a "twist" because it brings short rates up and long-term rates down.
Other possible tools could include lowering the rate the Fed currently pays banks to keep cash on reserve, or laying out explicit guidelines for how the central bank would react to changes in inflation or the unemployment rate. Read highlights Ben Bernanke speech on U.S. economic outlook september 8 2011
For the latest updates PRESS CTR + D or visit Stock Market news Today
No comments:
Post a Comment