hinitng at further rate cuts, which is dollar neg and positive for gold and silver.
But in this environment nothing is really conducive to positive price action regardless of the fundamentals.:
WASHINGTON (AFP) - US Federal Reserve chairman Ben Bernanke said Thursday he sees "a period of sluggish growth" followed by improvement on interest rate cuts and a stimulus plan, and kept the door open to further cuts. Speaking to a US Senate panel, Bernanke reiterated that the central bank is "carefully evaluating" the economic situation and remains ready to act "in a timely manner" to guard against a downturn, a hint at more potential rate cuts. The remarks offered little new on the economic or monetary policy outlook but were the first by Bernanke since Congress approved and President George W. Bush signed a 168-billion-dollar economic stimulus plan. Bernanke told the Senate Banking Committee that the stimulus plan, which aims to boost consumer and business spending, would help lift economic growth later this year. "At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt," Bernanke said, according to a copy of his prepared remarks. The Fed chief, by repeating comments made in the Federal Open Market Committee statement last month, appeared to be indicating the central bank is open to further cuts in rates if needed to stave off a downward economic spiral. Robert Brusca at FAO Economics said the Fed is walking a fine line in stimulating the economy without trying to rekindle inflation. At the first sign of an upturn, Bursca said, "the Fed will have to stop being aggressive in cutting rates and will have to begin to ponder reversing course. For now the Fed has flexibility. But for how much longer will this last?" The Fed has made a series of dramatic cuts in interest rates since September to bring the federal funds rate to 3.0 percent from 5.25 percent amid unusual financial market turmoil. The actions included an emergency three-quarter-point cut on January 22 and another half-point reduction a week later. Bernanke essentially repeated the comments from the January 31 meeting and stated:"The FOMC will be carefully evaluating the incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks." On inflation, Bernanke repeated the view that price pressure "should moderate from its recent rates, and the public's longer-term inflation expectations should remain reasonably well-anchored." The latest figures showed a sharp slowdown in the US economy in the fourth quarter with a tepid expansion of just 0.6 percent on an annual basis, with the impact of the worst housing slump in decades hitting the banking sector and consumers. The Fed responded with a series of rate moves and Congress acted with unusual speed in late January and early February to pass a stimulus package after the White House called for a large growth package. Bernanke said the Fed's task is complicated by the fact that its monetary policy impact has a lag. "Therefore, our policy stance must be determined in light of the medium-term forecast for real activity and inflation, as well as the risks to that forecast," he said. "Although the baseline outlook envisions an improving picture, it is important to recognize that downside risks to growth remain." Treasury Secretary Henry Paulson, speaking to the same panel, indicated the administration sees a slowdown but no recession, despite many private forecasts indicating a downturn has arrived. "The housing correction, high energy prices and capital market turmoil are weighing on current economic growth," Paulson said. "I believe that our economy will continue to grow, although its pace in coming quarters will be slower than what we have seen in recent years," the Treasury secretary added.
