Fed Chief Ben Bernanke Speaks To Congress Committee Wednesday – Interest Rates Could Still Be Raised

Fed Chief Ben Bernanke Speaks To Congress Committee Wednesday – Interest Rates Could Still Be Raised

Bernanke

(Best Syndication) Federal Reserve Chairman, Ben Bernanke, was in front of the House Budget Committee on Wednesday, one day after Tuesday’s 3 percent market drop on the New York Stock Exchange. The chief did not seem fazed by the decline in the market operations saying that "They seem to be working well, normally."

Bernanke said that he did not see any single cause for Tuesday’s sell-off. It may have had less to do with former Fed Chairman Alan Greenspan’s remarks over the weekend than the Market slump in China on rumors of government measures to cool the sizzling Chinese economy. Greenspan had said that the U.S. economy may be headed for a recession.

Investors on Wall Street must have liked what the new Chairman had to say because stocks rose Wednesday. The Dow Jones Industrial Average rose by 52.39 points to close at 12,268.63. Bernenke said "My view is that taking all the new data into account, that there is really no material change in our expectations for the U.S. economy since I last reported to Congress a couple weeks ago.”

Reuters says that the stock market plunge had driven investors into the “safe-haven” of government debt. This raised expectations that the U.S. central bank would cut interest rates by August. But Bernenke said that the Fed may still need to raise interest rates to keep inflation in check.

Although the government reported that the economy grew at just 2.2 percent in the forth quarter of last year, that it was still within the Fed’s expectations. The initial estimates were that the economy would grow by 3.5 percent. Bernenke said "There's a reasonable possibility that we'll see some strengthening of the economy sometime in the middle of the year."

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By Steven Potter
Best Syndication Business Writer

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