Today Fed Chairman Ben Bernanke told Congress that the Fed was ready to continue to act as needed to support the economy. He also stated though that signs point to growth later in the year. The Fed has lowered interest rate 2.25% since September, lowering the rate to 3%.
He acknowledged that the growth outlook has worsened over the past few months. His comments reinforced investors' expectations the central bank would lower interest rates by a half-percentage point at its next meeting on March 18.
However, the central bank chairman also said he expects sluggish growth to give way to a somewhat stronger expansion in the second half of the year as the impact of fiscal and monetary stimulus now put in place is felt. Bernanke painted a somber picture of risks facing the economy, and U.S. stock prices and the dollar fell on his gloomy assessment. In early afternoon, the Dow Jones industrial average was down more than 140 points, or 1 percent.
So it looks like more cuts are coming and they are doing whatever they can to avoid a recession, perhaps even at the cost of future growth as inflation becomes a bigger concern.