WASHINGTON (MNI) – The following is the transcript of a response of
Federal Reserve Chairman Ben Bernanke to a question during his Thursday
afternoon news conference:

Bernanek: There’s again a range of areas where actions could be
taken and I can’t proscribe all those responses. On the fiscal side,
there will be a increase in taxes and cut and spending on January 1st of
the coming year. CBO has suggested, if that’s allowed to take place that
it would cause unemployment to begin to rise and it might throw the
economy back into recession. So I think one very basic thing that could
be done to help address the recovery — the weaknesses in the recovery
and the need for more employment would be to address the fiscal cliff
while simultaneously addressing longer term fiscal sustainability issues
which remain, of course, very serious. So that’s one area where there’s
a lot of potential benefit. If the fiscal cliff isn’t addressed, as I’ve
said, I don’t think our tools are strong enough to offset the effects of
a major fiscal shock so we’d have to think about what to do in that
contingency. So I think it’s really important for the fiscal
policymakers to, you know, work together to try and find a solution for

** MNI Washington Bureau: 202-371-2121 **