Financial Briefs

Breaking financial news from Wall Street to Main Street

Bernanke Moves Closer to Rate Cut as Risks Intensify

Posted by financialbriefs on September 25, 2008

The “intensification” of the financial crisis in recent weeks is curbing Americans’ access to borrowing, making the outlook for consumer spending “sluggish at best,” Bernanke told lawmakers in Washington yesterday. While he noted that risks to inflation remain, the Fed chief’s testimony focused on “grave threats” to the banking system.

“It opens the door a bit further for rate cuts, although it doesn’t signal that the committee is at that point already,” said former Fed researcher Brian Sack, now senior economist at Macroeconomic Advisers LLC in Washington. “It still seems like it would take a further deterioration in financial conditions or in the data to prompt a rate cut.”

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