Industry News

Bernanke leaves door open for Dec. 11 rate cut

Fed chair, deputy hint that further action justified

Federal Reserve Chairman Ben Bernanke said Thursday that the Fed must remain "exceptionally alert and flexible" in its monetary policy decisions, and warned that renewed turbulence in financial markets "partially reversed" improvements in September and October. Bernanke's comments echoed those in a speech delivered Wednesday by Fed Vice Chairman Donald Kohn, which led many investors to expect a reduction in short-term interest rates when the Fed's Open Market Committee meets Dec. 11. Speaking in Charlotte, N.C. -- headquarters for three of the top 10 U.S. banks -- Bernanke said a "fresh wave" of investor concern has contributed to a widening of risk spreads for many types of loans in recent weeks, including many unrelated to housing. Continued credit losses and write-downs at financial institutions, prompted in many cases by credit-rating agencies' downgrades of securities backed by residential mortgages, remain the focus of investors' concerns, Bernanke said. Falling sto...