Bernanke warns of economic 'headwinds'
'Setbacks are possible'
Last Updated: Monday, November 16, 2009 | 4:37 PM ET
CBC News
Federal Reserve chairman Ben Bernanke said Monday economic "headwinds" will restrain the pace of the U.S. recovery.
He said reduced bank lending and a weak labour market continue to justify low interest rates.
Federal Reserve chairman Ben Bernanke warns that the U.S. economic outlook remains challenging. (Jose Luis Magana/The Associated Press) "Significant economic challenges remain," Bernanke said in a speech to the Economic Club of New York.
"The flow of credit remains constrained, economic activity weak and unemployment much too high. Future setbacks are possible."
But Bernanke tried to balance that with defending the falling U.S. dollar, promising to keep a close eye on the currency. Central banks usually raise interest rates to attract buyers back to a currency.
The dollar started the day weaker against most major currencies on the news that Japan's economy grew in the third quarter at its fastest pace in more than two years.
Gold soared. December bullion closed up $22.50 on the New York Mercantile Exchange at $1,138.60 an ounce. Oil finished up $2.55 to $78.90 a barrel.
Toronto's stock market followed commodities higher. The S&P/TSX composite index closed 104.6 points higher at 11,512.3.
(With files from The Associated Press)
