Bernanke's Testimony Provides No QE3 Hint

June 7, 2012 06:10 AM

Federal Reserve Chairman Ben Bernanke offered no hints about further Fed stimulus when he provided testimony before the Joint Economic Committee, but he said the Fed remains prepared to take actions if needed if the euro-zone crisis escalates.

"Economic growth has continued at a moderate rate so far this year. Real gross domestic product (GDP) rose at an annual rate of about 2 percent in the first quarter after increasing at a 3 percent pace in the fourth quarter of 2011," he said. "Growth last quarter was supported by further gains in private domestic demand, which more than offset a drag from a decline in government spending."

Link to full testimony.

While saying the banking and financial conditions in the U.S. has improved "significantly since the depths of the crisis," he said concerns about the euro-zone debt crisis continues to strain global financial markets. "The crisis in Europe has affected the U.S. economy by acting as a drag on our exports, weighing on business and consumer confidence, and pressuring U.S. financial markets and institutions," he said. "European policymakers have taken a number of actions to address the crisis, but more will likely be needed to stabilize euro-area banks, calm market fears about sovereign finances, achieve a workable fiscal framework for the euro area, and lay the foundations for long-term economic growth. U.S. banks have greatly improved their financial strength in recent years, as I noted earlier. Nevertheless, the situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely. As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate."


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