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Bernanke warns on deficits as Treasury rates rise

Reuters [1]
Wednesday, June 3, 2009

Federal Reserve Chairman Ben Bernanke warned on Wednesday that rising U.S. debt was contributing to a spike in longer-term interest rates, and said now was the time to start working on reining in deficits.

He gave no clue as to whether the U.S. central bank would step up its purchases of government debt or mortgage-backed securities to offset the rising borrowing rates, something investors have been watching for.

“Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance,” Bernanke said in testimony prepared for delivery to the House of Representatives’ Budget Committee.



“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” he said.

Bernanke gave a relatively upbeat assessment of the economy, saying he still expected the recession to bottom out and growth to resume later this year.

Full article here [1]