US Fed chief cautious about quick economic recovery

October 16th, 2008 - 1:17 am ICT by IANS  

Washington, Oct 15 (DPA) US Federal Reserve chief Ben Bernanke warned Wednesday that the emergency action taken by the Bush administration in response to the financial crisis is unlikely to produce a swift economic recovery.”Stabilisation of the financial markets is a critical first step, but even if they stabilise as we hope they will, broader economic recovery will not happen right away,” Bernanke said in a speech to the Economic Club of New York.

President George W. Bush’s $700-billion rescue package for the financial markets provides the government with the power it needs to repair the economic damage and prevent a wider fallout, Bernanke said.

“The problems now evident in the economy are large and complex, but, in my judgement, our government now has the tools it needs to confront and solve them,” he said.

US exports are likely to drop as other countries suffer economically, and a slowdown in the housing market and business investment was already underway before the full severity of the financial crisis emerged, Bernanke said.

“Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning,” he added.

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