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Federal Reserve issues dire warnings on US and Europe crisis

 
 
 
 
 
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Announcement: Federal Reserve Chairman Ben Bernanke attends a news conference following a two-day policy session in Washington D.C. on Wednesday

Europe’s debt crisis poses huge risks to America – while improvements in growth and unemployment are going to be much slower than first thought.

Those were today’s dire warnings from the U.S. central bank, although it did note the strengthening in the country’s economy in the third quarter.

The Federal Reserve held monetary policy steady in a 9-1 vote and offered no direct hints it is looking at fresh ways of helping the economy.

Fed Chairman Ben Bernanke said economic activity and labour market conditions will improve, but ‘progress is likely to be frustratingly slow’.

‘Moreover, there are significant downside risks to the economic outlook, most notably concerns about European fiscal and banking issues,’ he said.

‘They have contributed to strains in global financial markets, which have likely had adverse effects on confidence and growth.’

He said the central bank left open the possibility of expanding its holdings of mortgage debt if U.S. economic conditions worsened.

‘I do think that purchases of mortgage-backed securities is a viable option. Certainly, something we would consider if the condition were appropriate.’

In fresh quarterly projections, the Fed lowered its forecasts for growth and raised its forecasts for unemployment for this year and the next two.

Policymakers did not see the jobless rate of 9.1 per cent falling to a level they consider consistent with full employment even by 2014.

Officials now expect the world’s largest economy to grow by 2.5 to 2.9 per cent next year, down from June’s forecast of 3.3 to 3.7 per cent.

They saw the unemployment rate going no lower than 8.5 to 8.7 per cent by the end of 2012, up from 7.8 to 8.2 per cent envisioned in June.

Fed officials believe a jobless rate of between 5.2 and 6 per cent will give full employment. They say it will get to a minimum of 6.8 per cent by 2014.

Mr Bernanke has called the lofty level of U.S. unemployment, which has held above 9 per cent for the past five months, a national crisis.

Charles Evans, president of the Chicago Federal Reserve Bank, dissented on Wednesday because he wanted the central bank to ease policy at this meeting.

U.S. stocks held earlier gains after the statement was released, while 10-year Treasury note prices slipped.

The Dow Jones closed up more than 175 points as investors were calmed by the Fed saying it will do more for the economy if the conditions warrant.

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  • Madam Curie

    Hmm,the vulture people.

  • Rich

    The Federal Reserve should certainly know that we are going to have a very inflationary economy. After all printed the money that is going to cause runaway inflation. Bailing out banks, car companies, insurance companies with money that you don’t have will cause this every time. If a company cannot make or sell a product at a profit they should go out of business. Simple economics!

  • Jean-Francois Morf

    If the PIIGS goes bankrupt, 2 big USA banks having sold millions CDS to multi-billionaires speculators will loose 150 trillions $! These 2 banks would better buy back all PIIGS bonds that transform the multi-billionaires into trillionaires!

  • Rick Alexander

    All citizens of America have been warned time and time again that financial calamity was coming. The majority chose to ignore the warnings. I am an Australian citizen and my heart goes out to the American people who have made a difference in this world. I took an interest and looked into the economics of the USA and sadly, I feel sorry for where it is all headed. I even tried – like many Americans have tried – to expose what is really going on. To prove this, I tried to publish the truth about the Federal Reserve on Wikipaedia only to be warned that I should desist from making amendments to the information – or be barred from the site. What I tried to do was name the real brains behind the 1913 Federal Reserve Act. Whilst it is known that it came about as a result of the (Senator) Aldrich Bill – it was the other participants on Jeckyll Island in Novembeer 1910 who are of more interest. For eg, Paul Warburg was the key drafter whilst the real mastermind was none other than Baron Rothschild of London. Sadly, most people of the USA believe the US Govt controls world gold prices – WRONG. The prices are set each day by the House of Rothschild in London!!. On top of that, did you know that the terms for Federal Reserve Board members have terms that went from being 8 years to 10 years – ensuring that they outstayed any term of a US President because they are the ones that actually control the world finances, not the G8, G7 or G20, they are but annoying committees to the Federal Reserve. When Kennedy threatened nationalise the Federal Reserve, we know how that ended. So, all of the above info was entered by me into the Wikipaedia site and within just 10 minutes I was warned to back off!! By who?? Someone whose job it was to monitor the site and not allow the truth to be known. If you don’t believe me, give it a go and see if it happens to you. Please read Eustace Mullins book (free) about the Federal Reserve and learn the real truth about the Federal Reserve of the USA.

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