Even after the markets stabilise the broader recovery will not happen immediately, says Fed chairman Ben Bernanke
The chairman of the US Federal Reserve, Ben Bernanke, warned that economic recovery could take some time, even after confidence returns to the financial system.
Bernanke, who was addressing the Economic Club of New York, said: ‘Stabilisation of the financial markets is a critical first step, but even if they stabilise, as we hope they will, broader economic recovery will not happen right away. Economic activity had been decelerating even before the recent intensification of the crisis.’
He also pointed out that the housing market continues to be a source of weakness in the US economy.
The US government’s $700bn financial bail-out package should help reduce risks to the economy, he said.
The Treasury said earlier in the week that it would inject $250bn into the US banking system to increase liquidity and return confidence to the system.