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Breaking News from MoneyNews.com
Bernanke Says Fed Will Do What's
Needed
Federal Reserve Chairman Ben Bernanke pledged Friday that the
central bank will ''act as needed'' to keep the credit crisis that
has unhinged Wall Street from hurting the national economy.
In anxiously awaited remarks, Bernanke didn't specify what the
Fed's next move will be but made clear policymakers are keeping
close tabs on the problem, which has roiled investors in the United
States and around the globe.
Even as Bernanke vowed Fed action, he sought to temper investors'
expectations.
Editor’s Note: 12
Ways to Protect Your Investments From the Liquidity
Crisis.
''It is not the responsibility of the Federal Reserve — nor would
it be appropriate — to protect lenders and investors from the
consequences of their financial decisions,'' Bernanke said. ''But
developments in financial markets can have broad economic effects
felt by many outside the markets, and the Federal Reserve must take
those effects into account when determining policy.''
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Many believe the odds are growing that the Fed will cut its most
important interest rate, now at 5.25 percent, by at least
one-quarter percentage point on or before Sept. 18, its next
regularly scheduled meeting. The Fed hasn't lowered this rate in
four years.
The Fed ''will act as needed to limit the adverse effects on the
broader economy that may arise from the disruptions in financial
markets,'' Bernanke told an economics conference here.
To guide the Fed in terms of what its next move will be, Bernanke
said policymakers will pay especially close attention to the
''timeliest indicators'' as well as information gleaned from
businesses and banks around the country. Economic data that was
taken before the credit markets really seized up in August will be
much less useful to policymakers to assess the country's economic
health, he explained.
Editor’s Note: Use
ETFs to Profit From a U.S. Recession.
It was his first speech — and his most extensive comments — since
the credit crunch took a turn for the worst in August. The carnage
in credit markets and the turmoil on Wall Street pose the biggest
test of Bernanke's skills since taking the Fed helm 19 months ago.
President Bush was announcing steps Friday to aide homeowners who
are having trouble making the payments on risky mortgages.
© 2007 Associated Press. Editor's
Notes:
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