Today, Federal Reserve Chairman Ben Bernanke delivered a speech at the National Press Club on the Federal Reserve’s response to the financial crisis. In his remarks, Bernanke stated that, “[r]ecent economic statistics have been dismal, with many economies, including ours, having fallen into recession.” Bernanke noted that the financial crisis has caused the Federal Reserve to drive the federal funds rate to a record low range between zero and 0.25 percent and the Federal Reserve to unleash a number of financial tools designed to provide liquidity to credit constrained markets.
Asserting that the Federal Reserve is “doing everything we can to expand the availability of credit,” Bernanke announced that the Term Asset-Backed Securities Loan Facility (“TALF”) should be operating soon. The money from TALF will boost asset backed securities collateralized by student loans, credit card loans and Small Business Administration guaranteed loans.
Bernanke also discussed the Federal Reserve’s efforts to increase transparency. Bernanke discussed the projection of longer term values of output growth, unemployment, and inflation in reports released by the Federal Open Market Committee (“FOMC”). In addition to their regular quarterly projections, the FOMC today released longer term (up to six years)economic projections. These projections, detailed in the minutes from the January FOMC meetings, in pertinent part, projected that unemployment will likely rise from the current level of 7.6 percent to between 8.5 and 8.8 percent; and that GDP will shrink by between 0.5 and 1.3 percent down from the November projection that GDP would range between negative 0.2 percent and positive 1.1 percent.