Federal ReserveBoard Chairman Ben Bernanke reassured Congress Wednesday that the Fed has no plans to raise interest rates any time soon.
“The federal funds rate is likely to remain exceptionally low for an extended period,” Bernanke told the House Financial Services Committee. Last week’s decision to raise the discount rate charged to banks who tap the Fed for short-term credit was a result of improvements in private-sector sources for such financing, Bernanke said. It should not “lead to tighter financial conditions for households and businesses and should not be interpreted as signaling any change in the outlook for monetary policy,” he said.
That reassurance came as a relief to Wall Street, where stocks advanced on the news, and to most members of Congress.