Fed will intervene strongly when required: Bernanke
28 Aug 2010
Markets rallied on Friday with the Fed Reserve chairman Ben Bernanke sending out unambiguous signals that the central bank would not shy away from intervening strongly should the faltering economic recovery really begin to go wrong. But he also suggested that that the time to intervene, maybe, had not arrived as yet.
The Commerce Department's Bureau of Economic Analysis revised second-quarter GDP growth to an insipid 1.6% rate. Though above the forecast 1.3 % rate, but below the 2% rate which suggests a weak economic recovery, the statistic prompted Bernanke to vow that the central bank "...will do all that it can do to ensure continuation of the economic recovery."
He added the caveat, however, that recovery hadn't slowed enough to warrant action.
The low GDP growth for the second quarter is only the latest in a string of indicators that suggest that the United States may be headed for a "double-dip" recession.
"We have come a long way, but there is still some way to travel," Bernanke told a symposium of bankers and economists in Jackson Hole, Wyoming, on Friday. He promised that the Fed "will do all that it can do to ensure continuation of the economic recovery."
The Dow Jones Industrial Average chalked up its biggest gain since 2 August, adding more than 160 points to 10,150.65.
