The Federal Reserve needs to consider whether current interest rate policy remains appropriate in view of signs that U.S. economic activity is likely to be subdued during the remainder of this year and into next year, Fed Chairman Ben Bernanke said today.
The intensification of financial turmoil and the further impairment of the functioning of credit markets seem likely to increase the restraint on economic activity in the period ahead, Mr. Bernanke said in prepared remarks before the annual meeting of the National Association for Business Economics in Washington.
To support growth and reduce the downside risks, continued efforts to stabilize the financial markets are essential, Mr. Bernanke added. The Federal Reserve will continue to use the tools at its disposal to improve market functioning and liquidity.
The next meeting of the Federal Open Market Committee is Oct. 28-29.