Bernanke Suggests Rate Cuts Ahead

Fed chief sees threats from employment, housing, credit
By Polly Davis Doig,  Newser Staff
Posted Feb 14, 2008 9:20 AM CST
Federal Reserve Board Chairman Ben Bernanke pauses while discussing the near-term economic outlook during testimony before the House Budget Committee on Capitol Hill in Washington in this Thursday, Jan....   (Associated Press)
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(Newser) – Federal Reserve Chairman Ben Bernanke signaled today that further interest rate cuts might be necessary, citing continuing fallout from the credit and housing market collapses, reports the Wall Street Journal. Bernanke told the Senate Banking Committee he expected "a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt."

But though he forecast an improving long-term outlook, Bernanke cautioned that softening labor markets, high energy costs, and tightening credit may drive the economy back down in the short term. The Fed is widely expected to further cut the key interest rate, which it has already cut by 2.25% since September, in order to stave off recession.