Bernanke Hints at More Rate Cuts

Washington, DC, February 14, 2008--Federal Reserve Chairman Ben Bernanke the economy has deteriorated and hinted that the central bank is ready to keep on lowering interest rates.

In comments to the Senate Banking Committee, Bernanke said hiring has slowed and people are likely to cut back on spending, as they face high energy prices and see the value of their homes fall.

"The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said.

"To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so."

Bernanke also said that tighter credit conditions have aggravated problems in the housing market. The inventory of unsold homes is high and foreclosures have reached record numbers.

"Further cuts in homebuilding and in related activities are likely," Bernanke cautioned.

Bernanke sees a "period of sluggish growth" ahead. However, he said growth should pick up later this year as the Fed’s interest rate cuts work their way into the economy and the economic stimulus package takes hold.