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FT.com / US / Economy & Fed - Fed chief downbeat on US economy
Ben Bernanke, the Federal Reserve chairman, has delivered a bleak prognosis for the US economy, suggesting that he supports a new monetary stimulus to battle high unemployment and head off the risk of a downward spiral in prices.

The increasing likelihood of hundreds of billions of dollars of further asset purchases by the Fed - a strategy known as quantitative easing - will heighten tensions in international currency markets by weakening the dollar further. That may prompt other central banks to follow suit with currency intervention or QE of their own.

Mr Bernanke on Friday also marched the Fed another step closer to adopting a formal inflation target - a politically contentious goal he has pursued since becoming chairman - saying that most of the body's officials think that price rises should be "2 per cent or a bit below".

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Fri Oct 15th, 2010 at 04:31:40 PM EST
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