Bernanke Signals Rate Cuts on Concern About Economy

Washington Post (02/28/08) P. D1; Irwin, Neil
In testimony before the U.S. House Financial Services Committee on Feb. 27, Federal Reserve Chairman Ben Bernanke--citing concerns about the economic downturn, further softening in the labor market, worsening credit availability and even more declines in the housing market--insisted that the central bank is willing to reduce interest rates to prevent a major economic slump. According to Wells Fargo senior economist Scott Anderson, "He didn't say the word recession, but if you read between the lines, all this talk about further downside risk is dealing with the risk we may already be in one." Bernanke appeared more worried about inflation than previously, acknowledging that the central bank's expectation that a leveling off of food and energy prices will push down inflation this year could be off base. In response to Bernanke's testimony, the future markets are looking for a 0.5-percentage point cut in the federal-funds rate at the central bank's meeting on March 18.