Federal Reserve

A new stimulus program may be adopted by the United States, Federal Reserve Chairman Ben Bernanke told Congress Wednesday. Bernanke noted that additional asset purchase plan is in the works.

The head of the central bank said that the economy is growing more slowly than expected, and should that continue the central bank stands at the ready with more accommodative measures.

On Wednesday the US Federal Reserve cut its forecast for the economic growth while it didn’t suggest any further monetary easing saying the recovery would eventually pick up through 2012.

Ben Bernanke said that while such factors as high commodity prices which impact the economy should be fleeting, still the recovery would feature some weakness.

"Part of the slowdown is temporary and part of it may be longer lasting," Bernanke told a news conference after a two-day Fed policy meeting.

Gold stayed almost unchanged ahead of the upcoming report on a US Federal Reserve meeting. On Wednesday the Fed ends its two day meeting which is expected to clarify the situation about an economy.

Spot gold traded steadily at $1,545.93 an ounce by 0542 GMT after rising as high as $1,547.90 on Tuesday. In early May gold reached a lifetime high around $1,575.

"Approaching the resistance level, we can say gold is a bit cautious," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

According to the stats released by the Federal Reserve in April American consumers borrowed more money for the 7th consecutive month. However, the central bank reports that Americans cut back on their credit cards.

Consumer borrowing increased by about $7.2 billion boosted by greater demand for school and auto loans. A category that measures credit card use fell for the second time in three months. It has risen only twice since August 2008, the height of the financial crisis.

Last week officials of the Federal Reserve were holding intense talks on developing exit strategies. According to the sources familiar with the matter the policymakers divided over to sell billions of dollars assets first or raise the interest rate.

The discussion was more robust than described by the Fed Chairman Ben Bernanke at the news conference on April 27. At that time Bernanke said the committee "continued its ongoing discussion of the available tools for removing policy accommodation…”

According to the report released by the Federal Reserve the financial system purportedly continued its pace towards healing from credit crisis. The survey polled senior bank executives who reported an increased demand for commercial real estate loans even though there was a significant damage caused to residential housing markets where demand for mortgages declined.

But banks have been cautious about lending and consumers wary of piling on debt, and the data showed there was still some ways to go before credit conditions return to normal.

As it was expected before today the European Central Bank has raised its benchmark rate by 25 basis points to 1.25% for the first time since July 2008. The ECB also increased its deposit rate by 25 basis points to 0.50%, and raised its marginal lending rate to 2.0 percent from 1.75%.

Federal Reserve chairman Ben Bernanke said this week that a recent spike of inflation is driven mainly by rising commodity prices across the globe and it is unlikely stay persistent.

These comments are in sharp contrast to other US central bank officials who believe the time is coming for the Fed to begin tightening monetary policy.

Earlier Atlanta Fed President Dennis Lockhart also said that inflation would probably remain moderate.

Top Federal Reserve officials stated this week that the US economic recovery is gaining momentum.

Sandra Pianalto, a Cleveland Fed President, said that she expects US recovery to go further at a moderate pace and rising commodity and energy prices will have only temporarily pressure on broader consumer prices.

"The recovery seems to have established a firmer footing. I am seeing clearer signs of a virtuous cycle of growth," Pianalto said in a speech at the University of Akron.

Warren Buffet expressed an optimistic view of the US economic prospects and said that despite his "enormous respect" for the efforts of Federal Reserve Chairman Ben Bernanke to move the economy forward, more stimulus is not the answer now.

"In the end, I don't think we need more of that," Buffett said in an interview on CNBC television.

Meantime, he believes that with the improvement in the business world a decline in the unemployment rate should also come to the low 7 percent range by the November 2012 elections from 9 percent now.

Ben Bernanke, chairman of the US Federal Reserve, said that the central bank supports the Dodd-Frank financial regulatory overhaul and is moving swiftly to put its provisions into action.

"Dodd-Frank is a major step forward for financial regulation in the United States," Bernanke said in congressional testimony on Wednesday.

Bernanke is due to speak about regulation before the Senate Banking committee on Thursday. His prepared text made no mention of the outlook for the economy or monetary policy.
 

Ben Bernanke said on Thursday that the US economic recovery still needs help from the Federal Reserve even though the country has more signs of improvement.

The chairman of the central bank now gives slightly better outlook for the largest economy in the world pointing to gains in household spending, improved confidence, and stepped up bank lending as signs 2011 may bring stronger growth than 2010.

The United States faces another financial crisis, says a governmental official. Phil Angelides, chairman of the Financial Crisis Inquiry Commission (FCIC), said that the financial crisis that crippled the economy could happen again.

He blamed regulators for lacking backbone and corporate management for being imprudent. Angelides said it was "striking how little has changed" since the crisis came to a close.

Federal Reserve Ben Bernanke made a positive outlook for the US economy yet he stopped short of saying that everything will be super good through the year as jobless rates will unlikely contract substantially.

"We see the economy strengthening. It has looked better in the last few months. We think a 3 to 4 percent-type of growth number for 2011 seems reasonable," Bernanke said at an event sponsored by the Federal Deposit Insurance Corporation.

A new report from the US Federal Reserve published this week revealed that American economy strengthened by the year end. The Beige Book report showed a very bright picture of the US progress but it has made little impression on experts.

Federal Reserve reported better conditions across all 12 of its districts, though banking and financial services showed results that varied by region.

"Economic activity continued to expand moderately from November through December," the central bank said in a statement.