Washington - US Federal Reserve chief Ben Bernanke warned Wednesday that the emergency action taken by the Bush administration in response to the financial crisis is unlikely to produce a swift economic recovery. "Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away," Bernanke said in a speech to the Economic Club of New York.
President George W Bush's 700-billion-dollar rescue package for the financial markets provides the government with the power it needs to repair the economic damage and prevent wider fallout, Bernanke said.
"The problems now evident in the economy are large and complex, but, in my judgement, our government now has the tools it needs to confront and solve them," Bernanke said.
US exports are likely to drop as other countries suffer economically, and a slowdown in the housing market and business investment was already underway before the full severity of the financial crisis emerged, Bernanke said.
"Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning," Bernanke said.
