Federal Reserve chief says to reverse stimulus at "appropriate time"

08:32, March 29, 2010      

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Federal Reserve Chairman Ben Bernanke told Congress on Thursday that the US central bank will reverse the massive monetary stimulus at the "appropriate time."

In prepared testimony to the House Financial Services Committee, Bernanke said the Fed has substantially phased out its massive lending programs as financial conditions have improved.

"Some facilities were closed over the course of 2009, and most others expired on February," the Fed chief said. "In addition, the Federal Reserve has been normalizing the terms of regular discount window loans."

At its meeting last week, the Federal Open Market Committee, the interest rate policy making body of the central bank, decided to keep the federal funds rate at its historic low level of zero to 0.25 percent to boost the economic recovery.

FOMC said in a statement after the meeting that it continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

Bernanke explained Thursday that such a decision was made because the US economy "continues to require the support of accommodative monetary policies."

"However, we have been working to ensure that we have the tools to reverse, at the appropriate time, the currently very high degree of monetary stimulus," he said.

"We have full confidence that, when the time comes, we will be ready to do so," Bernake added.

Source: Global Times
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