Bernanke signals bold Fed action to lift growth
Updated: 2008-01-11 09:28
Hoenig was one of five regional Fed presidents who sat on the central bank's policy-making committee last year, but he does not get to vote on interest rates in 2008.
Job report shocks
Bernanke, meanwhile, said a report last Friday that showed only 18,000 jobs were created in December was a clear sign of mounting economic risks. "Should the labor market deteriorate, the risks to consumer spending would rise," he said.
He said still-unsettled financial markets were a concern and it was not yet clear the extent of losses that banks and other market participants face as mortgage defaults mount.
But Bernanke said banks had gone into the current unsettled situation in good shape and should be able to weather it.
"Notwithstanding the effects of multibillion-dollar write-downs on the earnings and share prices of some large institutions, the banking system remains sound," he said. "Nevertheless, the market strains have been serious and they continue to pose risks to the broader economy."
He said rising foreclosures on subprime mortgages were making lenders wary about extending credit to anyone, not just those with spotty credit histories, spreading the impact of the housing downturn more broadly throughout the economy.
Bernanke said the Fed's recent introduction of a special auction facility to inject liquidity into the banking system by selling credit was showing results. The intent is to encourage banks to keep lending and Bernanke said the auctions may be made permanent.
|
|
|
||
|
||
|
|
|
|