Bernanke Glum on Growth; No Hint of More Stimulus

Tuesday, 07 Jun 2011 04:57 PM


WASHINGTON (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke on Tuesday acknowledged a slowdown in the economy but offered no suggestion the central bank is considering any further monetary stimulus to support growth.

He also issued a stern warning to lawmakers in Washington who are considering aggressive budget cuts, saying they have the potential to derail the economic recovery.

A recent spate of weak economic data, capped by a report on Friday showing U.S. employers expanded payrolls by a meager 54,000 workers last month, has renewed investor speculation that the economy could need more help from the Fed.

"U.S. economic growth so far this year looks to have been somewhat slower than expected," Bernanke said in remarks prepared for delivery at a banking conference in Atlanta.

"A number of indicators also suggest some loss in momentum in labor markets in recent weeks," he added.

However, Bernanke argued the latest bout of weakness would likely not last very long, and should give way to stronger growth in the second half of the year.

Citing a recent spike in U.S. inflation, Bernanke said it was a worrisome trend but, like the economic softness, he predicted the trend would be transitory.

He argued that weak growth in wages along with stable inflation expectations gave him comfort that the economy was under no immediate threat of an upward price spiral.

On the budget, Bernanke repeated his call for a long-term plan for a sustainable fiscal path, but warned politicians against massive short-term reductions in spending.

"A sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery," Bernanke said.

© 2015 Thomson/Reuters. All rights reserved.

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