Fed Chief Endorses Stimulus

Updated from 11:07 a.m. EST

Federal Reserve Chairman Ben Bernanke supported the case for both easy monetary policy and fiscal stimulus in his comments on Capitol Hill Thursday morning.

After outlining the string of events that led the Fed to forecast a weak growth environment for the U.S. economy in 2008 and perhaps into 2009, Bernanke, in a question-and-answer session after his speech, said a stimulus package "would be significant, not just window dressing." As he did in another speech a week ago, Bernanke also promised the central bank will ease interest rates if and when needed.

"The baseline outlook for real activity in 2008 has worsened and the downside risks to growth have become more pronounced," said Bernanke in his testimony. The chairman noted the continuing recession in the residential real estate market and made mention of "disappointing" labor market conditions that threaten consumer spending trends, which have helped support growth through the third quarter of 2007. ...