Fed chairman hints at rate cut


Fed chairman hints at rate cut
Federal Reserve head Ben Bernanke has hinted that action could be taken to boost the US economy sparking speculation of an interest rate cut.

In a speech at a private event in the United States, the chairman of the country's central bank denied that he was expecting a recession to take place, although he admitted that the economic outlook for the new year had worsened with more "pronounced" risks to growth.

Mr Bernanke said "additional policy easing" may be necessary and promised to act to guarantee stability in financial markets if intervention was required.

He added: "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."

The Dow Jones Industrial Average closed 117 points higher after the announcement.

Previously, the Fed reduced interest rates by 0.5 per cent and held money market auctions to boost liquidity in the wake of the subprime crisis.

Uncertainty about the level of losses caused by loans to high-risk borrowers has led to banks stockpiling their reserves and avoiding lending to each other. The central bank's auctions were meant to reduce the cost of obtaining finance for institutions.

In spite of the Fed's previous moves, investment banks such as Goldman Sachs and Merrill Lynch have forecast a recession in the world's largest economy.

Yesterday, the Bank of England and European Central Bank decided to keep interest rates unchanged.

Bookmark with:
Bookmark with: Digg Digg Bookmark with: Del.icio.us Delicious Bookmark with: Reddit Reddit Bookmark with: StumbleUpon StumbleUpon Bookmark with: Google Google Bookmark with: Technorati Technorati Bookmark with: Netvouz Netvouz

Latest News:

Search News
News Front Page
Accountancy / Tax
Advertising / PR
Armed Forces
Aviation / Aerospace
Banking / Finance
Charities / Voluntary
Childcare / Youth
Construction / Property
Customer Services
Education / Training / Teaching
Emergency Services
Engineering / Electronics
Entertainment / TV / Theatre
Graduate Roles
HR / Recruitment
Health / Beauty
Hotel / Catering / Restaurants
IT / Internet
Insurance / Pensions
International / Overseas
Management / Business
Manufacturing / Industry
Media / New Media / Creative
Medical / Healthcare
Pharmaceutical Industry
Public Sector
Retail / Wholesale
Sales / Purchasing / Marketing
Science / Technology
Secretarial / PA / Admin
Skilled / Semi-skilled Manual
Transport / Logistics
Travel / Tourism / Leisure