Bernanke: Economic recovery takes time

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Source: CCTV.com | 10-16-2008 08:34

US Federal Reserve Chairman Ben Bernanke says economic recovery could take time, even after confidence in the US financial system returns and markets stabilize. He has pledged all-out efforts to cushion fallout to the economy.

Federal Reserve Chairman Ben Bernanke speaks at the Economic Club of New York Wednesday, Oct. 15, 2008. (AP Photo/Mark Lennihan)

Bernanke says the US has seen marked slow-downs in consumer spending, business investment, and the labor market. He points out that the housing market continues to be a major source of weakness in the US economy.

Ben Bernanke, Chairman of US Federal Reserve, said, "Stabilization of the financial markets is a critical first step, but even if they stabilize, as we hope they will, broader economic recovery will not happen right away. Economic activity had been decelerating even before the recent intensification of the crisis."

Bernanke says the US government's 700 billion dollar financial bailout package should help reduce risks to the economy.

The Treasury Department announced on Tuesday that it will inject up to 250 billion dollars into US banks to increase liquidity. The government also plans to buy failing mortgages and other bad debts held by banks.

Bernanke pledges to use all available tools to battle the financial and credit problems.

The Fed has already dropped its key rate to 1.5 percent from 2 percent, and many economists expect further cuts.

The Fed will also begin buying vast amounts of short-term debt later this month.

Bernanke says credit markets will take some time to unfreeze, but inflation should become more moderate as the economy slows down.

He says the restraining influences on economic activity will be offset by the favorable effects of lower prices for oil and other commodities on household purchasing power.

Editor:Zhang Pengfei