Published: Fri, 27 Feb 2009 20:23:11 +0100

Fed's Rosengren Calls for Immediate Support for Financial System

(CEP News) - Actions to help stabilize the financial system must be taken "without delay," Boston Fed President Eric Rosengren said on Friday.

"I believe that below-potential growth is likely to persist until financial markets and financial institutions can resume more normal functioning," Rosengren said while speaking in New York.

"So in addition to the other steps being taken to stimulate the economy, we need to be sure that actions to support the stability of the financial system are taken without delay - and, in the slightly longer term, that regulatory frameworks are thoughtfully reformed."

He reaffirmed that the Federal Reserve will take "all necessary actions" to stabilize the economy, and that aggressive policies so far have prevented a more severe downturn. He noted that the Fed's balance sheet expansion should reverse naturally as markets normalize.

The Fed president said he expects real interest rates to remain "low enough to get the economy moving again."

By Stephen Huebl, shuebl@economicnews.ca, edited by Sarah Sussman, ssussman@economicnews.ca