Bernanke: US growth will be hurt unless steps taken

THE CHAIRMAN of the US Federal Reserve, Ben Bernanke, has warned that unless policy-makers take the "necessary steps", the US economy's long-term growth potential will be "materially affected".

Speaking at the Economic Club of Minnesota last night, just hours before President Barack Obama gave a speech on job creation, Bernanke said that the US must devise a plan to tackle the deficit that does not harm the country's fragile recovery.

Bernanke added that the combination of the US debt ceiling row and the European debt crisis had undermined US growth. He also expressed concern that Americans were not spending enough. "Even taking into account the many financial pressures they face, households seem exceptionally cautious," he said.

He remained vague on the subject of how the Reserve would respond to continuing weakness in the US economy, saying only that the Federal Open Market Committee (FOMC), which sets interest rates, would examine a range of options when it meets later this month.

Read a full report at the Daily Telegraph. ·