WASHINGTON — Not mincing his words, Federal Reserve Chairman Ben S. Bernanke told Congress today that the economy faces "significant challenges," and aren't likely to improve in the short term.
During testimony before the Senate Banking Committee he said the biggest problems are the "sluggish pace" of growth and strains in the financial markets, job growth and the housing market.
He said that a myriad of factors threatened the economy in the months ahead.
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"The possibility of higher energy prices, tighter credit conditions, and a still- deeper contraction in housing markets all represent significant downside risks to the outlook for growth," he told lawmakers.
He added the "upside risks to inflation" have intensified.
Bernanke noted the Treasury Department's proposals to calm the market's nerve by providing additional financial capital to Fannie Mae and Freddie Mac but did not take a position on them. He noted that his agency had authorized the Federal Reserve Bank of New York to lend Fannie and Freddie money if necessary.
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