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Bernanke faces the press with little news

Updated: 2011-04-28 10:34

By Tan Yingzi (China Daily)

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WASHINGTON - In the United States Federal Reserve's first news conference in 32 years, Chairman Ben Bernanke said the Fed will maintain its stimulus policies and showed confidence that the dollar will get back on solid footing as the US economy climbs out of its recession.

After the Fed released its scheduled policy statement at noon Wednesday, Bernanke became the first head of the Fed to take questions from the media following a monetary policy decision since 1994.

But in fact, Bernanke didn't announce any new changes to the monetary policy, saying that in the need to contain inflation, further easing measures are unlikely.

The dollar slid to a three-year low against major currencies that day given expectations that the Fed will significantly lag behind other major central banks in raising interest rates.

"We have done extraordinary things in order to try to help this economy recover," Bernanke told reporters.

Projecting slow economic growth with a modest uptick in inflation, he said the central bank will continue with a second round of quantitative easing and keep interest rates low for an "extended period".

The Fed has kept interest rates at historic lows since December 2008. It first began buying bonds under its stimulus policies in November of last year. The Fed said on Wednesday that it will complete a purchase of $600 billion in long-term Treasury securities by the end of June.

The US' economic recovery is proceeding at a "moderate pace and overall conditions in the labor market are improving gradually", said the Fed's policy statement. "Increases in the prices of energy and other commodities have pushed up inflation in recent months. The committee expects these effects to be transitory."

The Fed cut its GDP growth estimate for 2011 to between 3.1-3.3 percent from a January forecast of 3.4 -3.9 percent.

It expects unemployment rate to land between a range of 8.4-8.7 percent, better than a range of 8.8-9.0 percent forecast in January. It also significantly raised its estimate of inflation this year to a range of 2.1-2.8 percent from 1.3-1.7 percent range, taking into account a recent surge in oil prices.

The Fed's loose monetary policy has drawn criticism from both home and abroad. The dollar is down more than 11 percent against six other major currencies, making US exports cheaper but contributing to higher imported energy prices.

Major economies, such as China, Russia and Germany, have all expressed their concerns over the falling dollar, which they say will affect the global economic recovery.

US Treasury Secretary Tim Geithner said on Tuesday that the US will never embrace a strategy of weakening its currency to gain an economic advantage over its trading partners, emphasizing that a strong dollar is in the interest of the country.

Bernanke also affirmed that "a strong and stable dollar is in the interest of the United States and the global economy".

"Our view is that, the best thing we can do for the dollar is to keep the purchasing power of the dollar strong by keeping inflation low and by creating a stronger economy," Bernanke said.

Despite the current short-term fluctuation, he said he believed that the US' monetary policies will create conditions for an "appropriate and healthy" dollar in the near future.

China Daily


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