28 Apr 2011

Bernanke calls for action on US deficit

3:40 pm on 28 April 2011

The chairman of the US Federal Reserve has called on politicians to take action to cut the country's "very serious" debt problems.

Ben Bernanke made the call at a news conference announcing a cut in the Federal Reserve's economic growth forecast from between 3.1% and 3.3% compared with the previous forecast of 3.4% to 3.9%.

The BBC reports that Mr Bernanke said the biggest economic was how to shrink America's long term deficit and stem the flow of red ink.

The deficit was, he said unsustainable and, if not addressed, would have significant economic consequences for economic growth, financial stability and the American standard of living.

Mr Bernanke also referred to recent comments by Standard & Poors rating agency that the US could be downgraded from its current AAA rating because of concerns over the deficit.

The Federal Reserve Chairman said that if that goads a response from political leaders, the warning was a constructive action.

The news conference was the first ever by a Federal Reserve Chairman and Mr Bernanke said they were part of a wider move by the Fed to become more transparent by allowing the bank to explain its decisions and address criticisms of its handling of the financial crisis.