Bernanke: Economy Faces 'Numerous Difficulties'

Associated Press (07/16/08); Aversa, Jeannine
The country's economic problems present "significant challenges" for Federal Reserve policymakers as they try to get the economy back on track, Fed Chairman Ben Bernanke testified July 15 before the Senate Banking Committee. Lowering rates to prop up the economy would exacerbate inflation, and an increase to keep prices in check would stifle the struggling economy and housing sector. As a result, most economists expect the central bank policymakers to hold rates steady when they meet on Aug. 5. The weak housing market and tight credit conditions are key reasons why the economy will grow "appreciably below its trend rate" over the rest of the year, Bernanke stated.