Central Bank officials are expressing concern that Congress’s failure to close the nation’s “fiscal sinkhole” puts the economy at risk. At the same time, they say that acting too quickly may choke off a recovery hobbled by an unemployment rate above 9 percent.
Some economists are concerned that government-spending cuts will inhibit economic growth, which may prompt the Fed to maintain record stimulus well beyond the completion of its $600 billion bond purchase program.
Should the economy weaken further, there is little more the Fed can do to spur growth and create jobs with interest rates near zero and the balance sheet at a record $2.83 trillion.
However, many economists believe that the strategy of economic “easing” through asset purchases in order to create more liquidity in the short term is unlikely; fearing a fiscal tightening for the government may be just over the horizon.
Some Republicans have made many economists worry that if the US debt ceiling is not raised soon the effects will not be too high. However, Bernanke last week dismissed notions that Treasury payments could be “prioritized” to avoid a default, saying delaying any government payments could create “serious concern” about the nation’s creditworthiness.
Such concerns have put more pressure on foreign money markets, exchange rates, and inflation. Moreover, some worry that FOREX markets may soon take a big hit, if the US dollar fall to record lows.
(아주경제 앤드류 이 기자)
reporter
Park Sae-jin
swatchsjp@ajunews.com