CHICAGO (Reuters) - A rash of U.S. mortgage delinquencies is not expected to hurt the broader economy, Federal Reserve Chairman Ben Bernanke said on Thursday.
“We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,” he said in remarks to a Chicago Fed conference.
Bernanke said the cooling of the housing market has been “an important source” of slowdown in the U.S. economy, which has experienced growth of a little more than 2 percent over the past year.
Housing market weakness has persisted longer than expected, he said.
“Although a leveling-off of sales late last year suggested some stabilization of housing demand, the latest readings indicate a further stepdown in the first quarter,” the Fed chairman said.