Bernanke Favors Low Interest Rates, Pushes for Broader Economic Regulation
September 8, 2008
Ben Bernanke, chairman of the Federal Reserve Board, spoke in favor of the Fed’s determination not to raise US interest rates during a yearly meeting of the Kansas City Federal Reserve Bank earlier today.
The economic troubles that have been plaguing the US since 2007 haven’t ended yet, claimed Bernanke. Thus, the Federal Reserve Bank is unlikely to wish the US prime rate to rise above 2% during the next few months.
America’s recent real estate and subprime lending crises, combined with rising inflation and unemployment, have created “one of the most challenging economic and policy environments in history,” said Bernanke. Although some Federal Reserve Board members have advocated increasing the interest rate to address the country’s high rate of inflation, most appear to agree with Bernanke.
America’s present economic slowdown will counteract inflation, believes Bernanke along with most of the Fed. Interest rates must remain low to encourage Americans to borrow and spend, thus combating economic stagnation.
The prices of US goods rose by a record 5.6% during the month of July, the highest monthly increase the US has seen in 17 years. However, the Fed anticipates that prices will eventually drop, especially for internationally-traded commodities such as oil, said Bernanke. Although the chairman termed the present US inflation situation “highly uncertain,” he predicted a normalization of inflation rates to occur “in the medium run.”
During the course of the symposium, Bernanke also argued for “broader” regulation. Rather than regulating specific companies, Bernanke asserted that the Fed should instead look at nationwide policies. In this way, the Fed should be able to anticipate problems such as the recent credit crisis before they begin, argued the
Meanwhile, Bernanke added, consumers never be lulled into complacency. “An expectation by the financial market participants that financial crises will never occur would create its own form of moral hazard and encourage behavior that would make financial crises more, rather than less, likely,” Bernanke admonished.
Recent Additions:
- A Brief Introduction To Homeowners Mortgage Insurance
- Finding Good Auto Insurance That’s Right For You
- Connecticut Regulators Warn Drivers: Auto Insurance Fraud Risks Money and Lives
- Auto Insurance Is Required So Make It Count
- Golden State Wants Environmentally-Friendly Auto Insurance
Related Articles
- Surprising Facts About Life Insurance Most people think there's just one type of life insurance policy. You pay a set premium at regular intervals, over a pre-determined period of time--say, 20 years. If you die at some point during the
- Worried About Getting Soaked on a Rainy Day? Try Umbrella Liability Insurance With the slow death of company pension plans and the paltry compensations offered by the US government's social security program, many older Americans are finding themselves strapped for cash. Longer life expectancies, while clearly desirable,
- Five Causes Of Rising Life Insurance Premiums Have you been wondering why your life insurance premiums have been getting more expensive? There are actually a number of reasons or factors that can contribute to premium cost increases. In most cases, if you
- Fed Chair Says Economic Outlook Darkening The chairman of the Federal Reserve Board has told Congress that the housing and credit debacles have created a great strain on the economy. Energy prices have worsened, and hiring has declined. Fed Reserve Chair
- Fed Regulation For Insurance Firms Bidding To Become Thrifts In the wake of a monumental move by six major insurance firms to become thrift institutions, speculation is rising what this will mean to the insurance industry as whole. The question is one of
Comments
Got something to say?
-
Advertisements
-
Categories
-
Advertising