This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bernanke Signals Continued Support For Low Rates

By MARTIN CRUTSINGER

WASHINGTON (AP) â¿¿ The Federal Reserve's low interest-rate policies are giving key support to an economy still burdened by high unemployment, Chairman Ben Bernanke told Congress on Tuesday. Bernanke signaled that the Fed's efforts to keep borrowing costs low will continue.

In a statement, Bernanke acknowledged that the Fed's aggressive program to buy $85 billion a month in Treasurys and mortgage bonds to keep rates low could eventually ignite inflation or unsettle investors. Several Fed policymakers said at their most recent meeting that the Fed might have to scale back its bond purchases because of those risks.

But Bernanke, delivering the Fed's semiannual report to Congress, said the risks remained contained for now.

On budget policy, Bernanke urged Congress to replace the automatic spending cuts due to start Friday with more gradual reductions in budget deficits in the short run.

Bernanke's testimony to the Senate Banking Committee is being watched by investors concerned about the doubts raised by some Fed officials about whether the bond purchases should continue. The bond purchases represent the third round of a program intended to strengthen sectors such as housing and autos through lower borrowing costs.

"Keeping longer-term interest rates low has helped spark recovery in the housing market and led to increased sales and production of automobiles and other durable goods," Bernanke said.

Bernanke addressed concerns that the Fed's purchases, which have pushed its balance sheet above $3 trillion, could trigger high inflation.

"Inflation is currently subdued and inflation expectations appear well-anchored," he said. "We do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation."

Bernanke said that over the past six months, the economy has grown moderately but unevenly. He said the pause in growth seen in the final three months of 2012 "does not appear to be a stalling-out of the recovery." He said growth appears to have picked up in the past two months.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs