August 21, 2009

Bernanke tells bankers to expect growth

U.S. Federal Reserve Chairman Ben Bernanke told assembled bankers and policymakers in Wyoming Friday to expect the U.S. economy to grow soon.

Fears of financial collapse have receded substantially, Bernanke said at the Fed's annual retreat in Jackson Hole.

After contracting sharply over the past year, economic activity appears to be leveling out, he said, echoing the phrasing from a recent Fed policy statement.

Then Bernanke took the sentiment a step further saying, the prospects for a return to growth in the near term appear good.

Bernanke said policymakers took a lesson from history by reacting quickly and aggressively to the financial crisis and averting a full-scale meltdown, such as occurred in the 1930s.

In this episode, by contrast, policymakers in the United States and around the globe responded with speed and force to arrest a rapidly deteriorating and dangerous situation, he said.

Qualifying his assessment, Bernanke said strains persist in many financial markets across the globe.

Financial institutions face significant additional losses, and many businesses and households continue to experience considerable difficulty gaining access to credit, he said.

The economic recovery is likely to be relatively slow at first, he said, predicting unemployment would decline only gradually from high levels.