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

Can you talk about what impact you have seen of operation twist on
longer term CD rates and investment rate bond yields and do you have any
message for people who are relying on those kind of instruments for
income.

BERNANKE

Sure. It is a little bit early to fully assess the effects of what
we call the maturity extension program but it does seem to be having at
least in a preliminary sense (…) the intended effect of lowering
longer term interest rates and twisting the yield curve as was
anticipated.

That in turn should lead to still lower mortgage rates and other
interest rates which are relevant to the economy. We are quite aware
that very low interest rates particularly for protracted period do have
cost for a lot of people. That have costs for saver. We have complaints
from banks that complain that their net interest margins are affected by
low interest rates. Pension funds will be affected if low interest rates
for protracted period require them to make larger contributions. So we
are aware of those concerns. And we take them very seriously.

I think the response is though that there is a greater good here
which is the health and recovery of the U.S. economy. And for that
purpose we have been keeping monetary policy conditions accommodated and
trying to support recovery, trying to support job creation. After all
savers are not going to get very good returns in an economy which is in
a deep recession.

Ultimately if you want to earn money on your investments you have
to invest in an economy which is growing. And so we believe that our
policy will ultimately benefit not just workers and firms and households
in general but will benefit savers as well as the returns that they can
earn on their investments will improve with the improvement in the
economy.

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

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