Bernanke to focus on the monetary policies
February 27, 2008
When the Federal Reserve chairman Ben Bernanke faces the House Financial Services and Senate Banking committees it is believed that he is going to focus remarking about the monetary policies. Only last week had Bernanke along with Treasury Secretary Henry Paulson testified before the lawmakers about the various actions of the Fed. Now he returns to the Capitol Hill on the 27th to appear before the committees.
It is believed that his remarks are going to revolve around the current state of the central bank’s economic policy. Ben Bernanke, it is believed, will have to face a lot of questions about the wobbly state of the U.S. economy. The position of the credit markets and the possibilities of the inflation are the other areas on which he will have to give answers. It has only been two weeks since Bernanke had to face questions from the Senate Banking committee.
In the meanwhile however the 2 policy makers said that the economic growth in the year is going to be rather slow. But they expressed their belief that the economy would stay well clear of the recession. This they believe so because of the $168 billion economic plan President Bush had signed on the 13th of February. The recent interest rate cuts that Fed brought about in the last week is another factor which strengthens this belief.
Bernanke is expected to elaborate on these believes but he is not expected to steer away from his current script of thoughts. This is because it would not be good for the image of Fed if its chairman was found to be deviating from his ideas.
Lately Fed has taken a sterner stand on issues regarding the economy of the country. Only last week did they announce that the forecasted growth rate for the current year was going to be lesser than what they had predicted earlier. They also said that the unemployment rate was going to climb more than 5 percent in the current year. The various economic data that has come out in the recent past are also suggesting that this is true.
A survey about the residential real estate on Thursday revealed that the turn-down in the home prices gather pace as the previous year came to an end. The New York based Conference Board reported that the consumer confidence fell to the lowest level in the last five years. The main reason for this fall in confidence is because of the fears that exist about the job market and the slowing business activity.
Another item that will remain as a main concern for the Federal Reserve and Bernanke will focus a lot on is the fragility of the credit markets. This is because the credit markets continue to face major liquidity issues. The commercial paper market is another area which continues to remain under a whole lot of pressure. This market is one of the important sources of short term funding.
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