Wednesday, July 13, 2011

Bernanke says more support possible if economy weakens

The chairman of the Federal Reserve, Ben Bernanke, has said the US central bank is prepared to renew stimulus efforts if the economy remains weak.

The Fed's second quantitative easing programme (QE2) ended two weeks ago.

Speaking to members of Congress, Mr Bernanke also said the US could expect only "moderate" growth over the coming quarters.

He added that the inflation pressures seen in the first half of 2011 were "transitory" and should ease.

He cited higher commodity prices and the earthquake in Japan, which led to parts shortages and drove up vehicle prices, as reasons for why inflation picked up.

The Fed expects to keep its ultra-low interest rate policy in place "for an extended period", he said.

The dollar extended earlier losses against the euro following Mr Bernanke's comments, with the euro rising more than a cent to $1.4088. (read more)