WASHINGTON (MNI) – The following is a transcription of responses of
Federal Reserve Chairman Ben Bernanke Wednesday to questions during a
press conference following the FOMC meeting:
QUESTION
You mention (…) what is happening there (In Europe) has an impact
on the U.S. economy. To what degree can the Fed do little more than
react to events abroad?
BERNANKE:
Well, it is a bit frustrating. Obviously the key decision makers in
Europe are the European leaders and economic policymakers there, and
ultimately it is their responsibility to find solutions to this very
difficult problem. Of course, I and Treasury Secretary and other
economic policymakers of the United States do confer and meet with
European policymakerses on a regular basis and we give our advice and
sometimes they take it and sometimes they don’t.
But obviously they are the ones who have to make those decisions.
So what we can do is really only a couple of things. One is that we can
look at our own financial institutions and try to assess the exposures
and the linkages between our institutions and those in Europe and the
sovereign debt in Europe and we have been doing that on a consistent
basis.
We have looked also of course, with other regulators, at money
market mutual funds and other types of financial institutions that have
connections to Europe. So that’s one thing that we can do.
The other thing we can do is stand ready if necessary to provide
whatever support that the broader economy needs and the financial system
need should things worsen.
We are hopeful that the latest measures vigorously implemented will
indeed ultimately reduce these stresses but in the case that things do
get worse both monetary policy and our policies of lender of last resort
are avaible to insulate the U.S. economy from the effects.
QUESTION
With the latest developments in Europe this week where the debt
deal seemingly was done and now the rug is pulled out. You’re getting
the sense that this economy just can’t get a break. And how would you
advise average Americans to deal with these continued shocks to the
economy and to the financial markets.
BEN BERNANKE:
Well I don’t want to make excuses. Again, we did overestimate the
pace of recovery for some fundamental reasons, having to do with — as I
mentioned — the time taken to achieve financial repair, the state of
the housing market and so on. With that being said as I indicated
earlier there has been a certain amount of bad luck and I think the
volatility in financial markets associated with the European situation
has been along with volatility associated with the U.S. fiscal
conditions has been a drag on recovery. I think it is part of the reason
why the second half of 2011 was less strong than we anticipated when I
was here at the last press conference in June.
So there has been that concern. It is showing up in Americans’
confidence and sentiment. You can see that right now consumer confidence
is about where it was in the depth of recession. That’s very
discouraging. To some extent at least that will be a drag on consumer’s
willingness to spend and to invest.
My best advice to Americans is to continue to live your lives and
to continue to think about your personal situation and try to make smart
decisions based on your own financial position. Clearly Americans are
trying to improve their balance sheets. They’re Trying to pay down debt.
That’s, of course, important. At the same time you want to make smart
decisions and good investments. You want to budget properly. Financial
literacy is a big part of this (…).
Unfortunately We didn’t dissociate ourselves from Europe. The
things happening there do affect us and that’s an unfortunately fact.
I hope very much that Europeans also find a set of solutions that
will allow markets to calm down and take of some of the head winds from
the U.S. economy.
** Market News International Washington Bureau: 202-371-2121 **
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