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Paulson welcomes Fed reaction but says US economy is resilient
US Treasury Secretary Henry Paulson said on Tuesday he was confident the US and global economies were resilient but welcomed an emergency rate rate cut by the US Federal Reserve as a helpful move.
- Reuters
- Published: 00:41 January 23, 2008
Washington: US Treasury Secretary Henry Paulson said on Tuesday he was confident the US and global economies were resilient but welcomed an emergency rate rate cut by the US Federal Reserve as a helpful move.
The US central bank cut benchmark US interest rates by a steep three-quarters of a percentage point while Paulson was still answering questions after addressing a Chamber of Commerce breakfast meeting.
Paulson had earlier acknowledged the US economy has slowed "materially" in recent weeks but, despite a meltdown in global stock prices, insisted that the global economy had "underlying resiliency" that would let it weather the storm.
The US Treasury chief initially looked surprised when a Chamber of Commerce official said the Fed had just cut rates in a relatively rare move between meetings of its policy-setting Federal Open Market Committee, but praised the action.
"This is very constructive and I think it shows this country and the rest of the world that our central bank is nimble and can move quickly in response to market conditions," Paulson said.
The US Treasury chief, who headed Wall Street giant Goldman Sachs before taking over Treasury in 2006, said the $145-billion short-term stimulus package that President George W. Bush was asking Congress to work on was needed to minimise the impact of a US economic slowdown. "We need to do something now, because short-term risks are clearly to the downside, and the potential benefits of quick action to support our economy have become clear," Paulson said.
Meanwhile, European finance ministers voiced concern yesterday as stock markets spooked by recession fear bled for a second day with scant regard for assurances that Europe would weather a storm blowing from the United States.
The chairman of the euro zone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, said the sell-off was partly irrational, while Spanish Economy Minister Pedro Solbes said everyone was concerned by the direction of markets.
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