Fed stimulus to continue
May 22, 2013
Reducing efforts to keep borrowing rates low in the United States would carry a substantial risk of slowing or ending the economic recovery, US Federal Reserve Chairman Ben Bernanke told the US congress Wednesday.
Even though the US economy was growing moderately this year and unemployment has fallen to 7.5 percent, the US jobless rate remained well above levels consistent with a healthy economy, Bernanke said.
In addition, higher taxes and spending cuts planned by the US administration were expected to slow growth.
Under efforts to overcome the economic crisis in the United States, the Federal Reserve Bank has initiated a bond and mortgage-buying program worth $85 million (65.7 billion euros) a month, stressing it would be upheld until the jobs market improved substantially.
As the US economy has shown signs of renewed vigor in recent months, analysts have wondered when the US Fed would decrease the pace of stimulus.
However, Bernanke's comments about the risks facing the economy suggest the Fed is not ready to slow its bond purchases which have kept longer-term interest rates low thus encouraging borrowing and lending.
On Wednesday, US stocks surged substantially after Ben Bernanke had made his statement.
uhe/kms (AP, Reuters)