Investors around the world have been unnerved by comments by Federal Reserve Chairman Ben Bernanke who said the US economy faces an “unusually uncertain” time.
US and Asian markets slid on Wednesday as did Europe in early trading on Thursday.
In congressional testimony, Bernanke indicated the Fed stands ready to ease monetary policy further if the US economic recovery withers.
He said: “Even as the Federal Reserve continues prudent planning for the ultimate withdrawal of extraordinary monetary policy accommodation, we also recognise that the economic outlook remains unusually uncertain. Although fiscal policy and inventory restocking will likely be providing less impetus to the recovery than they have in recent quarters, rising demand from households and businesses should help sustain growth.”
But one disappointed analyst said “The market was looking for some form of concrete action from Bernanke, a commitment to do something, all we got was that they’re aware of the risks and are prepared to take as yet unspecified actions.”
Bernanke did play down the risk of renewed recession and the possibility of deflation and said Fed policymakers still expect growth to be sustained despite a recent softening in the US economy.