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WASHINGTON: The European crisis and mandated budget cuts and taxhikes pose big risks for the US economy, Federal Reserve ChairmanBen Bernanke told Congress on Thursday. But with the economy motoring along at a "moderate" pace, he alsogave no hint as to whether the central bank would launch a newstimulus programme to help growth. Bernanke kept at arm's length from the idea, despite recentcomments by other senior Fed officials that more stimulus could bemerited by the current 2.0 percent annual pace of growth. "We have made no decisions," he said when asked by the JointEconomic Committee about the possibility of a "QE3" quantitativeeasing programme to further push down interest rates. However, he added, "I wouldn't want to take anything off the tableat this juncture." Bernanke said that the US economy was showing some signs ofstrength, including in exports and consumer spending. "Economic growth appears poised to continue at a moderate pace overcoming quarters," he said. The Fed chief said last year's increases in household spending havebeen sustained and that falling energy prices should help offsetslow income growth for Americans. He also said that inflation should stay at or below 2.0 percent,within the central bank's comfort zone. And despite Europe's problems, too, demand for US exports "has heldup well." But the economy remains frail, households and businesses deeplycautious, the housing market still depressed and unemploymentstubbornly high. Moreover, the economy remains vulnerable to two potential shocks:the eurozone crisis and the year-end "fiscal cliff." The eurozone turmoil has already strained global financial markets,and it has pushed a cloud over US consumer and business confidence,Bernanke said. "The situation in Europe poses significant risks to the USfinancial system and economy and must be monitored closely," hewarned. "European policymakers have taken a number of actions to addressthe crisis, but more will likely be needed to stabilise euro-areabanks (and) calm market fears about sovereign finances." The other looming threat is the legislation in place that couldboth raise taxes for Americans and force a drastic cut ingovernment spending at year's end, moves that economists say coulddrive the country back to recession if not changed. "The so-called fiscal cliff would, if allowed to occur, pose asignificant threat to the recovery," Bernanke said. The budget cuts and tax hikes already mandated - the product of anunhappy political compromise last year in Congress - could amountto between three and five percent of gross domestic product, "whichwould be a very significant impact on the near-term recovery,"Bernanke added. "What I am saying is that in ways that are up to Congress, stepsshould be taken to mitigate that overall impact... What isparticularly striking here is that this is all pre-programmed." Analysts noted that Bernanke gave away little as concerns policy inhis testimony despite growing discussion of more Fed stimulus. "If anything, he seemed to try to walk back market expectations ofanother round of easing at the June 19-20 meeting" of the Fed'spolicy board, said Paul Edelstein of IHS Global Insight. "The big takeaway from Bernanke's testimony is that he expects therecovery to endure, though it faces several risks.: The Fed could namely put off any new move until it sees moreeconomic data, putting the focus on the Fed's July 31 meeting,according to Edelstein. - AFP/ir/de. We are high quality suppliers, our products such as Steel Framing Systems Manufacturer , China Structural Engineering Designs for oversee buyer. To know more, please visits Commercial Steel Buildings.
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