Financial problems would be soon over, according to Bernanke’s announcement by Petra Kamenicka

As the Federal Reserve Chairman, Ben Bernanke has recently announced, the housing finance crisis and rising energy costs will remain a drag on the U.S economy for the rest of the year. As he adds: ,,The economy continues to face numerous difficulties, including ongoing strains in financial markets, declining house prices, a softening labour market, and rising prices of oil, food, and some other commodities. Problems on financial markets are not the only problems, which the U.S. economy suffers from. Another problem and fear, expressed by Bernanke in his speech is a threat of rising inflation. An increasing of inflation is caused by the high commodity prices. This result creates a threat, that Fed will not be able to take steps to support economic growth because of the risk that they will feed inflation pressures. Among the other economical problems belong credit troubles, high energy and food prices, housing slump, financial turmoil, cutting a number of jobs by employers that lasts six months.
Despite his pessimistic economical outlook, Fed has increased its forecast for economic growth. For all of 2008, the 1% -1.6% growth is expected. It is a surprising fact, in comparison to growth expected in April forecast. In April, Fed was looking for 0.3% - 1.2% growth. Bernanke acknowledges, that: ,,Families are facing hardships … this is clearly a rough time. It is clear economic growth has been slow and the labor market is weak. So conditions are tough on average families.’’ Bernanke in his speech explains that getting the economy to good health would help the weak currency. The weak currency contributed to the rise in oil prices and inflation.


related story: http://money.cnn.com/2008/07/15/news/economy/senate_banking/?postversion=2008071513

by Petra Kamenicka for PocketNews (http://pocketnews.tv)

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posted by Lucia Adamova