Bernanke Says Strong Actions Can Prevent 'Costly' Scenarios [View All]

[Amerigo Vespucci]

Source: The Wall Street Journal

By BRIAN BLACKSTONE
October 19, 2007 10:31 a.m.

In a speech Monday, Mr. Bernanke said, "risk-management considerations also played a role in the decision, given the possibility that the housing correction and tighter credit could presage a broader weakening in economic conditions that would be difficult to arrest." That justified "doing more sooner" with respect to policy, he said Monday.

Financial markets this week have raised the odds of another quarter-point rate cut at the end of this month, as housing and jobless-claims data suggest the economy may be weakening.

In his remarks Friday, Mr. Bernanke cautioned that assessing the economy's true state "remains a formidable challenge."

Uncertainty about the economy "provides a reason for the central bank to strive for predictability and transparency, avoid overreacting to current economic information, and recognize the challenges of making real-time assessments of the sustainable level of real economic activity and employment," Mr. Bernanke said.



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