Bush says confident of economy's long-term health

JACKSONVILLE, Florida (Reuters) - President George W. Bush on Tuesday said he remains confident in the long-term health of the U.S. economy despite facing what he called a "challenging time" of stresses and strains.

Bush spoke at the Jacksonville port at the same time the Federal Reserve was slashing a key interest rate by three-quarters of a percentage point as part of an effort to hold off a deep recession and avert financial meltdown.

He said the Fed and the U.S. Treasury Department were closely monitoring the situation in the financial markets that if further action were needed it would be done "in a way that does not damage the long-term health of our economy."

The Fed stepped in on Sunday to boost financial markets liquidity by cutting the discount rate and approving a takeover of ailing investment bank Bear Stearns.

"This is a challenging time for our economy," Bush said, blaming the situation largely on turmoil in the housing market.

"Our financial markets have also been subjected to stress," he said. "The Federal Reserve and the Treasury acted swiftly to promote stability in our financial markets at a crucial time."

"It was action that was necessary ... and they'll continue to closely monitor the markets and the financial sector," he added.

"In the long run, Americans ought to have confidence in our economy," Bush said. "I understand there's short-term difficulty, and I want people to understand that in the long run we're going to be just fine."

(Reporting by David Alexander, writing by Matt Spetalnick; Editing by Theodore d'Afflisio)