Business | Markets
Financial stress 'a drag on US growth'
US Federal Reserve Chairman Ben Bernanke yesterday said global financial markets were under "extraordinary stress" and threatening an already weak US economy as he offered his bleakest outlook since a credit crisis set in last year.
- Reuters
- Published: 23:39 September 24, 2008
Washington: US Federal Reserve Chairman Ben Bernanke yesterday said global financial markets were under "extraordinary stress" and threatening an already weak US economy as he offered his bleakest outlook since a credit crisis set in last year.
"The intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth," Bernanke said in comments prepared for delivery to the Joint Economic Committee.
"The downside risks to the outlook thus remain a significant concern," he said. "Action by Congress is urgently required to stabilise the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy."
Bernanke ticked off areas of the economy that are struggling or have been hit by financial turmoil, which in recent weeks felled investment bank Lehman Brothers and forced the government to take over mortgage finance firms Fannie Mae and Freddie Mac and rescue American International Group.
"More recently, economic activity appears to have decelerated broadly," he said.
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