Thursday, February 2, 2012

Bernanke: Fed will protect US from Europe fallout

Europe's financial crisis still threatens the US recovery, and the Federal Reserve will do everything it can to prevent it from damaging the economy, Federal Reserve Chairman Ben Bernanke said today.

Testifying before Congress, Bernanke said he was seeing signs that some of the uncertainty dampening US business investment, including European banking woes, might be waning.

But he said it was far too soon to say whether the United States could remain unscathed.

"Risks remain that developments in Europe or elsewhere may unfold unfavorably and could worsen economic prospects here at home," Bernanke told lawmakers in prepared remarks.

"We are in frequent contact with European authorities, and we will continue to monitor the situation closely and take every available step to protect the U.S. financial system and the economy."

Bernanke maintained a cautious tone on the U.S. outlook following a decision at a Fed policy meeting last week to announce that interest rates are likely to remain near zero until at least through late 2014.

At a news conference after that meeting, Bernanke indicated the central bank was considering additional monetary easing, but he offered no fresh hints of such plans in his testimony.