WASHINGTON (MNI) – The following is a transcript of comments made
by Federal Reserve Chairman Ben Bernanke during his testimony on
monetary policy to the House Financial Services Committee:

“From the point of view of savers, for most savers on average
something less than 10% of all savings by retirees is in the form of
fixed interest instruments like CDS. Remember people also own equities,
they own money market funds, they own money mutual funds, they have
401ks and a variety of things and those assets depend very much on how
strong the economy is.

“In trying to strengthen the economy we are actually helping savers
by making the returns higher, as we have seen in the stock market for

“The economy has been recovering and I believe monetary policy is
set appropriately to help the economy recover and again you cannot get
good returns to the economy unless you have growth.

“The other thing we are doing as you know is we have set an
inflation target and we committed to keeping inflation low and stable
and that also of course is good for savers because it is the inflation
adjusted return that matters in the end.”

“It is arguable that the interest are too high that they are being
constrained by the fact that interest rates cannot go below zero. We
have an economy where demand falls far short of the capacity of the
economy to produce, we have an economy where the amount of investment
and durable goods spending is far less than the capacity of the economy
to produce. That suggests that interest rates in some sense should be
lower than higher, we cannot make interest rates lower of course, only
can go down to zero, and again I would argue that a healthy economy with
good returns is the best way to get returns to savers.

“On providing credit I would just make one observation which was
the news this morning that bank lending increased last quarter at the
fastest rate since the recession.”

On current monetary policy:

“The policy is a conditional policy, it is based on what we know
now, this is where we think we are going to be, but of course is there
is a substantial change in the outlook we would have to adjust

** Market News International Washington Bureau: 202-371-2121 **

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