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U.S. markets recover from steep losses
NEW YORK, N.Y., Aug. 11 (UPI) -- U.S. Federal Reserve Chairman Ben S. Bernanke is unlikely to cut interest rates, based on the books and the scholarly papers he has written.
Last week’s market chaos has Bernanke confronting the first crisis of his 18 months as Fed chairman, The New York Times reported Saturday.
Some believe Bernanke should cut interest rates, which would help bail out the hedge fund managers and traders who bought the risky mortgages that led to the current market panic, The Times reported. Cutting interest rates, however, might fuel a resurgence of risky mortgage lending and rekindle the chaos.
Bernanke’s background and writings on the subject suggest market panics should be handle by focusing on short-term liquidity, not by cutting interest rates, The Times reported.
That is what Bernanke did Thursday and Friday when he authorized pumping $62 billion into the pool of funds available for lending, which lets banks provide credit to the marketplace without increasing interest rates, the newspaper said.
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