WASHINGTON (MNI) – The following is a transcript of comments made
by Federal Reserve Chairman Ben Bernanke during a Senate Banking
Committee hearing on monetary policy and the economy. In response to a
question about what form possible further policy stimulus by the Fed
would take, Bernanke gave the following response:

“Senator I think its important to preface the answer by saying that
monetary policy is currently very stimulative as I’m sure you are aware.
We have brought interest rates down close to zero, we have had a number
of programs to stabilize financial markets, we have language which says
we plan to keep rates low for an extended period. And we have purchased
more than a trillion dollars in securities.

“So certainly no one can accuse the Fed of not having been
aggressive in trying to support the recovery. That being said, if the
recovery seems to be faltering then we will at least need to review our

“We have not fully done that review and we need to think about
possibilities. But broadly speaking, there are a number of things we
could consider and look at; one would be further changes or
modifications of our language or our framework describing how we intend
to change interest rates over time — giving more information about
that, that’s certainly one approach. We could lower the interest rate we
pay on reserves, which is currently one-fourth of 1%. The third class of
things has to do with changes in our balance sheet and that would
involve either not letting securities run off — as they are currently
running off — or even making additional purchases.

“We have not come to the point where we can tell you precisely what
the leading options are. Clearly each of these options has got
drawbacks, potential costs, so we are going to continue to monitor the
economy closely and continue to evaluate the alternatives that we have,
recognizing that — as I said — policy is already quite stimulative.”

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

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