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Federal Reserve Chairman Gives Key Speech
7 Oct 08
In a speech delivered in Washington today, Fed chairman Bernanke indicated that the FOMC is leaning toward lower interest rates, as downside risks to growth have increased significantly, while inflation risks have diminished.
In a keynote address to the National Association for Business Economics in Washington, D.C., Federal Reserve chairman Ben Bernanke stated very clearly for the first time that downside risks to growth have increased significantly, while inflation risks have diminished. As a result, he indicated that the Federal Open Market Committee is currently reviewing the appropriateness of the Fed's current policy stance.The clear message from Bernanke's speech is that the "balance of risks" has shifted quite dramatically in the direction of downside risks to growth. The speech is a signal that further rate reductions are just around the corner. Indeed, Global Insight is forecasting that the FOMC will move to lower the federal funds rate by 50 basis points before the end of October, and will likely to move rates even lower at the end of 2008 and early 2009. by Brian Bethune
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