US Federal Reserve Chairman Ben Bernanke said Tuesday the latest figures on housing and consumer spending suggest a rapid contraction in the economy could be easing. "Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding and consumer spending, including sales of new motor vehicles," Bernanke said in remarks prepared for delivery at Morehouse College in Atlanta.
Bernanke is scheduled to deliver the speech at 1:30 pm (1730 GMT). The remarks, which were about the extensive actions the central bank is taking to stem the financial crisis, were posted on the Fed's website ahead of time. Some recent reports have suggested a moderating of the economy's downturn but data on Tuesday was less encouraging, with the Commerce Department reporting retail sales fell 1.1 percent in March where economists had foreseen a 0.3 percent rise.
Calling the current financial crisis the worst since the Great Depression, Bernanke explained the litany of emergency measures taken by the central bank and the Treasury Department with the aim of restoring battered credit markets. Bernanke said some of the programs might one day have to be removed in order to prevent all the stimulus from building into an outright threat of inflation.
"We have a number of effective tools that will allow us to drain excess liquidity and begin to raise rates at the appropriate time," he noted. "That said, unwinding or scaling down some of our special lending programs will almost certainly have to be part of our strategy for removing policy stimulus once the recovery is under way." Bernanke did not specify what areas he had in mind, but analysts believe it would include bonds backed by commercial real estate, a sector that has been deteriorating quickly in recent months.
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