Watch Ben Bernanke's testimony before Congress
The chairman of the US Federal Reserve, Ben Bernanke, has endorsed consideration of a second US economic stimulus plan after warning of a possible 'protracted slowdown.'
'With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate,' he said in comments to the House of Representatives budget committee.
Speaker of the House Nancy Pelosi has suggested that Congress may convene after 4 November presidential elections to pass a projected $150bn stimulus package.
The plan would increase federal spending on infrastructure, expansion of food stamps and unemployment insurance, and a focus on health care aid in the form of programs like Medicaid.
US President George W Bush signed into law a $168bn stimulus package earlier this year, but Senate Republicans rejected a second package last month.
The White House had given the calls for a new economic stimulus package a cool reception last week.
'If they want to provide some more details, we'll take a look at it,' White House spokeswoman Dana Perino said Tuesday.
Mr Bernanke said that economic recovery would depend greatly 'on the pace at which financial and credit markets return to more normal functioning' and said Congress should consider ways to encourage lending in any package.
'If Congress proceeds with a fiscal package it should consider including measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers,' he said in his remarks.
The central bank chief said in the slowing US economy consumption was falling, confidence was low and the housing market still depressed.
Recent data have suggested the US economy is in recession, with fears mounting that disruption in the financial system could cause a deep contraction.
Asked about a recession, Bernanke declined to use the word.
'We are in a very serious slowdown in the economy which has very serious consequences for the public. Whether it's called a recession or not is of no consequence,' he said.
He gave no firm hint of further interest rate cuts to help the economy, but said inflationary pressures were falling due to declining prices of commodities and imports.
Low inflation would give the bank room for manoeuvre to cut its rates.
'If not reversed, these developments, together with the likelihood that economic activity will fall short of potential for a time, should bring inflation down to levels consistent with price stability,' he said.
Mr Bernanke said any new tax and spending plan should take into account the long-term effect on government accounts.
Read a transcript of Ben Bernanke's testimony
