Bernake’s Congressional Testimony Firms Long Term Outlook
April 2, 2008
Bernake’s testimony to the Joint Economic Committee of Congress today provided the US markets with surprising support, despite admission that GDP could possibly dip into negative territory during the 1st half of 2008. In spite of the poor outlook, Bernanke stated that monetary policy has already been adjusted to stimulate growth into the second half of 2008 and into 2009. Questioned about the Fed’s controversial bail out of Bear Stearns, Bernake went on to defend the Fed’s intervention, saying that the move was necessary in order to maintain overall market stability. Analysts were pleased overall with Bernake’s frank language and transparency about the situation at hand, which comes into sharp contrast with the complex rhetoric of the previous Fed chief, Alan Greenspan. The Dow Jones Industrial Average, a bellwether of the US economy, was relatively flat after the speech, keeping yesterday’s gains in tact.