Federal Reserve Chairman Ben Bernanke warned the United States Congress that overzealous cuts to government spending could derail an already fragile recovery and said a US debt default could wreak financial havoc.
Federal Reserve Chairman Ben Bernanke said the central bank is ready to ease monetary policy further if the economy weakens and inflation moves lower, suggesting policymakers are actively mulling further stimulus.
Failure by US lawmakers to agree soon on a deal to raise the government's borrowing limit could deliver a severe shock to a still fragile recovery and global markets, the International Monetary Fund warned.
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its 2.86 trillion US dollars balance sheet to keep interest rates low.
The United States economy grew at a 1.9% pace in the first quarter marking the start of what Federal Reserve policy makers anticipate is a temporary slowdown in growth.
The Federal Reserve has cut its growth forecast for the US economy in the face of the impact of higher energy prices. It now estimates that the US economy will expand between 2.7% and 2.9% this year, down from its April forecast of 3.1% to 3.3%.
Exports of US goods and services rose to a record 175.6bn in April, helping to shrink its trade deficit. Data from the Commerce Department showed the gap between imports and exports fell by 6.7% to 43.7bn as manufacturers shipped more items such as computers.
The Federal Reserve does not need to consider additional monetary policy stimulus as the world's largest economy is likely to pick up in coming quarters due to growth in exports and disposable incomes, IMF acting chief John Lipsky said.
US Federal Reserve rejected criticism that its actions (‘accommodative monetary policy’) have pushed down the foreign exchange value of the US dollar and thereby boosted the price of commodities, adding that the Fed is “fully committed” to maintaining the dollar’s purchasing power and to keeping inflation in check.
US Federal Reserve Chairman Ben Bernanke said the “frustratingly slow” US recovery warrants sustained monetary stimulus while predicting that growth will gain speed in the second half of the year.