Reuters | Aug 28, 2010 | 4:09am IST
U.S. Federal Reserve Chairman Ben Bernanke said on Friday the economic recovery has weakened more than expected and the Fed stands ready to act if needed to spur slowing growth. Bernanke downplayed concerns that the economy might slip back into recession, predicting a modest expansion in the second half of this year, with the pace picking up in 2011. Otherwise, he said the Fed has sufficient ammunition left and could support growth by purchasing more government debt or by promising to keep rates exceptionally low for a longer period than currently priced in by financial markets. Bernanke’s comments, in an address to an annual conference of global central bankers hosted by the Fed in Jackson Hole, Wyoming, came as the government reported the economic growth rate in the second quarter was weaker than it had originally estimated. Bernanke made clear that the U.S. central bank has not decided what would prompt additional easing. "The overall tone was one of watch and wait," Goldman Sachs economist Jan Hatzius wrote in a note to clients, "despite ongoing signs that U.S. economic activity has not only dropped below its potential growth rate but has a significant probability of weakening further."
While Bernanke focused on near-term issues in the U.S. economy, the head of the European Central Bank, Jean-Claude Trichet, also speaking at the Jackson Hole conference, addressed long-term global challenges. He urged governments and central banks to ensure that the transition from very high debt levels incurred in response to the global financial crisis and its economic fallout takes place in an orderly fashion and without compromising economic growth. "The primary macroeconomic challenge for the next 10 years is to ensure that they do not turn into another ‘lost decade,’" Trichet told the conference. In Japan, which has experienced decades-long stagnant growth, the Bank of Japan is examining holding an emergency meeting early next week to ease monetary policy as the strong yen threatens the country’s fragile economic recovery, a source familiar with the matter said. An emergency meeting may be held as early as Tuesday.
Reuters | Mon May 31, 2010 | 8:59am IST
The heads of the U.S. Federal Reserve and the European Central Bank on Monday both singled out emerging economies as key to global financial stability. U.S. Federal Reserve Chairman Ben Bernanke said the world economy depends ever more on emerging markets to maintain strong domestic growth and economic and financial stability. "Improvements in emerging market policies and policy frameworks … have ramifications beyond the emerging market economies themselves," he said in videotaped remarks prepared for delivery to a conference sponsored by the Bank of Korea. Bernanke did not discuss the outlook for the U.S. economy or interest rates.
His remarks were echoed by European Central Bank President Jean-Claude Trichet who said in separate videotaped comments to the conference that emerging economies have been a source of strength in the global financial crisis. "One distinctive aspect of this crisis has been its originating in industrial economies. Emerging countries have also been severely affected, but as a group remained a source of strength for the world economy," Trichet said in the prepared comments. Commenting on South Korea, Bernanke said actions taken by its government and central bank since the Asian financial crisis of the late 1990s helped it weather the crisis that swept economies around the world in 2007-2009.