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Fed cuts growth forecasts

Thursday, June 23, 2011 - 01:52

June 22 - Federal Reserve Chairman Ben Bernanke and fellow policymakers lowered their expectations for the economic recovery, but were not willing to provide further stimulus besides exceptionally low interest rates already in place. Conway G. Gittens reports.

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Following a meeting of the Federal Reserve, Chairman Ben Bernanke acknowledged the U.S. recovery continues, but at a slower pace than hoped. The Fed lowered its growth forecasts through next year, raised unemployment predictions through 2013 and lifted inflation expectations as well. SOUNDBITE: FEDERAL RESERVE CHAIRMAN BEN BERNANKE (ENGLISH) SAYING: "We don't have a precise read on why this slower pace of growth is persisting. One way to think about it is that maybe some of the headwinds that have been concerning us, like weakness in the financial sector, problems in the housing sector, balance sheets and deleveraging issues - some of these headwinds may be stronger, more persistent than we thought." Bernanke also pointed to a few other factors for the slowdown, including high oil and food prices and the impact of the Japanese disaster on the global supply chain, but he believes the negative effect will not be long lasting. SOUNDBITE: FEDERAL RESERVE CHAIRMAN BEN BERNANKE (ENGLISH) SAYING: "What we say is that the temporary factors are in part the reason for the slowdown. Part of the slowdown is temporary and part may be longer lasting. We do believe that growth is going to pick up going into 2012, but at a somewhat slower pace than we had anticipated in April." Given that scenario, Bernanke is comfortable ending the Fed's bond buying program as scheduled in June, and with keeping key interest rates at 0 to 0.25 percent for "an extended period." Conway Gittens, Reuters

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Fed cuts growth forecasts

Thursday, June 23, 2011 - 01:52