TODAY'S PAPER
72° Good Evening
72° Good Evening
Business

Bernanke says Fed plans no economic change, yet

Federal Reserve Chairman Ben Bernanke. (March 25, 2010)

Federal Reserve Chairman Ben Bernanke. (March 25, 2010) Photo Credit: AP

WASHINGTON - Federal Reserve Chairman Ben Bernanke told Congress Wednesday that even though the economic recovery has weakened, the Fed plans no new steps for now to try to bolster it.

Bernanke said the Fed would consider action if matters worsened.

His comments to the Senate Banking Committee sent stocks, which were up 20 points before he spoke, tumbling, to a loss of 109 points.

Investors wanted to hear a strategy "that will make a second dip a very remote possibility," said David Resler, chief U.S. economist at Nomura Securities.

Bernanke downplayed the odds that the economy will slide back into a "double-dip" recession. Still, he acknowledged the recovery is fragile.

"If the recovery seems to be faltering, we have to at least review our options," Bernanke told lawmakers. But he said no further action is planned for now because the economy is still growing.

Record low interest rates are still needed to bolster the economy, Bernanke said. He repeated a pledge to keep them there for an "extended period." The recovery, which had been flashing signs of strengthening earlier this year, is losing momentum. And fears are growing that it could stall.

Bernanke said the Fed is "prepared to take further policy actions as needed" to keep the recovery on track. Fed policymakers haven't settled on "leading options," but they are being explored, he said.

Those options include lowering the rate the Fed pays banks to keep money parked at the Fed, strengthening the pledge to hold rates at record lows and reviving some crisis-era programs, Bernanke said.

Comments

We're revamping our Comments section. Learn more and share your input.

More news