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Fed 'attentive' to US dollar drop Fed 'attentive' to US dollar drop
(about 4 hours later)
US Federal Reserve chief Ben Bernanke has said policymakers are mindful of the sliding US dollar.US Federal Reserve chief Ben Bernanke has said policymakers are mindful of the sliding US dollar.
Mr Bernanke said he is "attentive" to the decline in the currency and is working to "help ensure that the dollar is strong".Mr Bernanke said he is "attentive" to the decline in the currency and is working to "help ensure that the dollar is strong".
But he also signalled that interest rates will be kept at a record low, a factor in the dollar's steep drop.But he also signalled that interest rates will be kept at a record low, a factor in the dollar's steep drop.
The US currency has dropped 13% against the pound and 6.4% versus the euro so far this year.The US currency has dropped 13% against the pound and 6.4% versus the euro so far this year.
The comments are unusual, as the Fed rarely talks about the value of the US dollar.The comments are unusual, as the Fed rarely talks about the value of the US dollar.
"We are attentive to the implications of changes in the value of the dollar," Mr Bernanke said, adding that the US central bank will continue to "monitor these developments closely"."We are attentive to the implications of changes in the value of the dollar," Mr Bernanke said, adding that the US central bank will continue to "monitor these developments closely".
Mr Bernanke is trying to bolster confidence in the dollar without actually raising rates, as that might hurt the nascent recovery.Mr Bernanke is trying to bolster confidence in the dollar without actually raising rates, as that might hurt the nascent recovery.
The US economy came out of recession in the July-to-September quarter, its first period of growth since the second quarter of 2008.The US economy came out of recession in the July-to-September quarter, its first period of growth since the second quarter of 2008.
Some economists are worried that the dollar may go into freefall if the Fed does not intervene in some form.Some economists are worried that the dollar may go into freefall if the Fed does not intervene in some form.
said he would tighten monetary policy when the economy recovers.
The comments eased concerns about the inflationary impact of US interest rates remaining at the current level of between 0% and 0.25%.
Higher rates would also make the dollar more attractive to investors.
Mr Bernanke's comments saw the dollar rise against the yen, and also gain against the euro and the pound.
The pound was down 1.4% against the dollar at $1.5870 , while the euro had fallen 0.7% to $1.4705, and one dollar was worth 89.76 yen.
'Prevent inflation'
"Accommodative [fiscal] policies will likely be warranted for an extended period," Mr Bernanke said in a press conference at the Fed's Washington headquarters.
"At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road."
US economic data continues to point to a slow and patchy recovery in the world's largest economy.
While a report last week showed that US firms cut more jobs than expected in September, figures this week detailed a rise in retail sales, and unemployment claims falling to a nine-month low.