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Bernanke backs financial reforms

Bernanke backs financial reforms
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Denying investors any clues on what the Federal Reserve might be planning to further stimulate the lacklustre US economy, Fed Chairman Ben Bernanke did not comment on policy or economy matters when he appeared before a congressional banking committee.

But he did throw his support behind moves to reform the US banking sector and give greater protection to consumers after the financial crisis.

Bernanke said the Fed backs the so-called Dodd-Frank Wall Street Reform and Consumer Protection Act.

“Dodd-Frank is a major step forward for financial regulation in the United States,” Bernanke said, adding that the US central bank is moving swiftly to put its provisions into action.

Looking to the worst possible scenario, the Federal Reserve has reportedly told the largest banks in the US to carry out stress tests to see how they would cope with a renewed recession and the jobless total above 11 percent.

As Bernanke spoke the latest inflation figures for the US were released. They were up by 0.4 percent in January from December, more than economists had expected. Year-on-year they rose 1.6 percent.

But some economists said the increase was not strong enough to suggest a troubling build-up in inflation pressures, the same view held by the Fed.

Core consumer prices – that is excluding food and energy costs – rose at the fastest pace in more than a year in January.

Month-on-month they increased 0.2 percent – above economists’ expectations for a 0.1 percent gain – driven by rises in the cost of apparel, shelter and airline fares.

The still soft inflation scenario was supported by a rise in applications for unemployment benefits last week, which suggested the labour market recovery would remain gradual, restricting wage growth.