The Fed will continue to use all available tools to restore the U.S. economy, and remains confident that its goals can be achieved, Fed Chairman Ben Bernanke said while delivering closing remarks at the Richmond Fed's Credit Market Symposium on Friday.
"I am confident that we can meet these challenges, not least because I have great confidence in the underlying strengths of the American economy," the head of the U.S. central bank said in Charlotte North Carolina.
Bernanke went on to say that the Federal Reserve's extraordinary facilities "are having the intended effect," citing as an example declines in 30-year fixed mortgage rates in the United States following the central bank's decision to purchase U.S. Treasuries.
"[Thirty]-year fixed mortgage rates, which responded very little to our cuts in the target for the federal funds rate, have declined 1 percentage point to 1-1/2 percentage points since our first MBS purchase program was announced in November," he said.
Although the Federal Reserve's programs have come at a huge cost to the central bank's balance sheet, Bernanke remained upbeat about the quality of the assets purchased by the Federal Reserve and the "very low" risk associated with these assets.
He also pointed out that all of the Fed's facilities were designed to wind themselves down as the credit markets move towards more normal functioning.
By Erik Kevin Franco and edited by Sarah Sussman
©CEP News Ltd. 2009