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Bernanke delivers sober message to US Congress

Even as US President George W. Bush sought yesterday to bolster confidence in US banks and the economy, US Federal Reserve Chairman Ben Bernanke brought a more sober message to US Congress.

In remarks released ahead of his testimony, Bernanke used words like “uncertain,” “constrained” and “subdued” to describe the current situation and future outlook.

“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,” the remarks said.

Bernanke said the financial markets remained under “considerable stress” in part because the outlook for the economy and credit quality “remains uncertain.”

Despite the government’s tax-rebate stimulus package, consumer spending was expected to be further “restrained” over the coming quarters, he said.

Citing last month’s conclusions by the Federal Open Market Committee, which regulates interest rates, Bernanke said the members indicated “considerable uncertainty” about their expectations for economic growth, with risks “skewed to the downside.”

Meanwhile, the US Commerce Department reported sluggish growth yesterday in retail sales for last month.

The 0.1 percent increase over sales in May was the smallest monthly rise since February, highlighting concerns about consumer spending as home values fall, fuel prices escalate and unemployment climbs.
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