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| Version 1 | Version 2 |
|---|---|
| Fed boss warns of weaker economy | Fed boss warns of weaker economy |
| (20 minutes later) | |
| Federal Reserve chairman Ben Bernanke has warned that the outlook for the US economy is deteriorating. | |
| He said the housing and credit market turmoil had hit the economy and added that a weak labour market could further undermine consumer spending. | He said the housing and credit market turmoil had hit the economy and added that a weak labour market could further undermine consumer spending. |
| Given the risks facing the economy, Mr Bernanke signalled that additional US interest rate cuts were likely. | Given the risks facing the economy, Mr Bernanke signalled that additional US interest rate cuts were likely. |
| The central bank began lowering the cost of borrowing in September and cut rates dramatically in January. | The central bank began lowering the cost of borrowing in September and cut rates dramatically in January. |
| 'Timely action' | 'Timely action' |
| Mr Bernanke did not mention the risk of a recession and said he expected the economy to pick up later this year. | Mr Bernanke did not mention the risk of a recession and said he expected the economy to pick up later this year. |
| I believe our economy will continue to grow, although its pace in coming quarters will be slower than what we have seen in recent years Henry Paulson, US Treasury Secretary | I believe our economy will continue to grow, although its pace in coming quarters will be slower than what we have seen in recent years Henry Paulson, US Treasury Secretary |
| "The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Mr Bernanke told the Senate Banking Committee. | "The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Mr Bernanke told the Senate Banking Committee. |
| "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so." | "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so." |
| He said the Federal Reserve "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks". | He said the Federal Reserve "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks". |
| The Fed has cut interest rates substantially since September last year to bring its key rate to 3% from 5.25%. | The Fed has cut interest rates substantially since September last year to bring its key rate to 3% from 5.25%. |
| This included an unscheduled emergency rate cut on January 23 of three quarters of a percentage point - its biggest in 25 years. | This included an unscheduled emergency rate cut on January 23 of three quarters of a percentage point - its biggest in 25 years. |
| Rescue plan | Rescue plan |
| US Treasury Secretary Henry Paulson, also testifying, said he was hopeful that the economy would be able to avoid falling into a recession this year, | US Treasury Secretary Henry Paulson, also testifying, said he was hopeful that the economy would be able to avoid falling into a recession this year, |
| "I believe our economy will continue to grow, although its pace in coming quarters will be slower than what we have seen in recent years," Mr Paulson said. | "I believe our economy will continue to grow, although its pace in coming quarters will be slower than what we have seen in recent years," Mr Paulson said. |
| He said the two-year $167bn (£86bn) economic stimulus plan signed into law by President George W Bush on Wednesday should help the faltering jobs market by creating more than half a million jobs by the end of this year. | He said the two-year $167bn (£86bn) economic stimulus plan signed into law by President George W Bush on Wednesday should help the faltering jobs market by creating more than half a million jobs by the end of this year. |
| The plan includes giving tax rebates to 130 million US households. | The plan includes giving tax rebates to 130 million US households. |
| Mr Paulson also said the government was working on plans to help homeowners who are facing problems making mortgage repayments avoid defaulting on their loans. | Mr Paulson also said the government was working on plans to help homeowners who are facing problems making mortgage repayments avoid defaulting on their loans. |