Bernanke_on_Deficits_NY_Times_April_14 - Bernanke Says...

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April 14, 2010 U.S. Must Start to Rein In Deficit, Fed Chief Says By SEWELL CHAN WASHINGTON — The Federal Reserve chairman said Wednesday that the government had to make “difficult choices” to address its gaping deficits and warned that “postponing them will only make them more difficult.” The chairman, Ben S. Bernanke , said that a credible plan for reining in federal deficits could help lower long-term interest rates. “Although sizable deficits are unavoidable in the near term, maintaining the confidence of the public and financial markets requires that policy makers move decisively to set the federal budget on a trajectory toward sustainable fiscal balance,” he said. In testimony to the Joint Economic Committee of Congress, Mr. Bernanke said that a moderate recovery had begun, but that it would take “a significant amount of time” to restore the 8.5 million jobs lost in the last two years. Of particular concern, he said, was that 44 percent of the unemployed in March had been jobless for at least six months. Inflation, the other side of Mr. Bernanke’s mandate as Fed chairman, remains low. Personal consumption spending, the index of inflation the Fed uses the most, has been rising at an annual rate of 1.25 percent. Excluding the more volatile prices of food and energy, core inflation has slowed to an annual rate of 0.5 percent. Mr. Bernanke did not provide new details on the Fed’s policy stance that short-term interest rates would remain near zero for “an extended period.” He said that time frame was contingent on high unemployment, subdued inflation and stable inflation expectations. “If those conditions cease to hold, and we anticipate changes in the outlook, then of course we will respond to that,” he told
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This note was uploaded on 02/27/2011 for the course ECONOMICS 201 taught by Professor P during the Spring '11 term at Columbia College.

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Bernanke_on_Deficits_NY_Times_April_14 - Bernanke Says...

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