Speaking at an annual conference in Wyoming, Federal Reserve Chairman Ben Bernanke gave an optimistic view of the economy on Friday. Bernanke said that Federal Reserve policies implemented in recent months have helped to stabilize a number of key financial markets across the globe.

Bernanke said, "Short-term funding markets are functioning more normally, corporate bond issuance has been strong, and activity in some previously moribund securitization markets has picked up. Stock prices have partially recovered, and U.S. mortgage rates have declined markedly since last fall. Critically, fears of financial collapse have receded substantially. After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good."

The Fed Chairman also said that while we've made progress, there are still a number of difficult challenges ahead - financial markets around the world remain strained, financial institutions face significant additional losses, and businesses and families alike are still having difficulty in gaining credit. "Because of these and other factors, the economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels," Bernanke said.

"Although we have avoided the worst, difficult challenges still lie ahead. We must work together to build on the gains already made to secure a sustained economic recovery, as well as to build a new financial regulatory framework that will reflect the lessons of this crisis and prevent a recurrence of the events of the past two years," Bernanke said. "I hope and expect that, when we meet here a year from now, we will be able to claim substantial progress toward both those objectives."



Source:
Federal Reserve Board