Federal Reserve Chairman Ben Bernanke will do whatever it takes to avoid deflation and the main beneficiary of the Fed chairman's policy response is likely to be President Obama and his re-election hopes, according to Thanos Papasavvas, the Head of Currency Management at Investec Asset Management,says CNBC.com.
The comments are Bernanke's first since a government report on July 8 showed employers added 18,000 jobs in June, less than the most pessimistic forecast in a Bloomberg News survey of economists. Bernanke said "disappointing" job growth in May and June was partly a result of temporary effects, such as high energy prices, and he predicted in response to a question that the pace of economic expansion would accelerate above 3 percent in the second half of 2011, reports Bloomberg.
Bernanke did not state a preference for one tactic over another, and reminded lawmakers that the Fed's experience with the options was somewhat limited and "employing them would entail potential risks and costs."
He urged lawmakers to raise the debt ceiling, warning that failure to do so could trigger "a huge financial calamity." Addressing the country's long-term fiscal sustainability through tax and entitlement reform would likely boost the economy in the short term, he said, according National Journal.