Bernanke 'ready' for more support

13 July 2011 Last updated at 15:09 GMT Ben Bernanke said the Fed expects to keep interest rates near zero "for an extended period" The chairman of the Federal Reserve, Ben Bernanke, has said the US central bank is prepared to renew stimulus efforts if the economy remains weak.

The Fed's second quantitative easing programme (QE2) ended two weeks ago.

Speaking to members of Congress, Mr Bernanke also said the US could expect only "moderate" growth over the coming quarters.

He added that the inflation pressures seen in the first half of 2011 were "transitory" and should ease.

He cited higher commodity prices and the earthquake in Japan, which led to parts shortages and drove up vehicle prices, as reasons for why inflation picked up.

The Fed expects to keep its ultra-low interest rate policy in place "for an extended period", he said.

The dollar extended earlier losses against the euro following Mr Bernanke's comments, with the euro rising more than a cent to $1.4088.

Revised forecasts

"Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation," Mr Bernanke said.

"However, given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate."

He added that Fed forecasts for June, which had already been significantly revised down from April, had not incorporated recent data such as last week's employment report.

That data showed that job creation all but ground to a halt last month, with only 18,000 new jobs created, and the unemployment rate rising to 9.2%.

Analysts said that Mr Bernanke had only raised the possibility of a further stimulus, and was not saying that it was necessary.

"In general, Bernanke's testimony has not changed our view that monetary policy is on hold," said Dana Saporta, economist at Credit Suisse in New York.

"The hurdle for a QE3 is too high right now, but if the European peripheral crisis intensifies, further policy accommodation might be considered."

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Homeowners 'ready to remortgage'

13 May 2011 Last updated at 09:37 GMT The mortgage market has had a slow start to the year, figures have shown Expectations of interest rate increases led to larger numbers of homeowners remortgaging in March, UK lenders say.

There were 33,900 remortgage loans advanced during the month - up 16% compared with the previous month, the Council of Mortgage Lenders (CML) said.

The figure is 17% higher than the same month a year ago.

Home loans for house purchases also proved to be more popular, although the lenders' body said the market remained "subdued".

The number of these loans was up 24% compared with the previous month. However, it was 17% down on March 2010, and the CML warned against reading too much into one month's figures.

"We saw a significant increase in both house purchase and remortgage lending in March but, over the first quarter of the year as a whole, the picture was subdued and that is unlikely to change for the foreseeable future," said CML director general Michael Coogan.

He said that the string of bank holidays could have affected mortgage market activity since March.

Rate guessing

Remortgaging accounted for 37% of all lending during the first three months, up from 30% during the previous quarter.

The CML said it was likely that this was linked to expectations of an interest rate rise in the coming months, making mortgages more expensive, even if this increase was only small.

The number of home loans made in March to first-time buyers was 28% higher than in February, but 17% lower than a year earlier.

Typically, buyers now have to provide a 21% deposit to get on the property ladder for the first time. This is a little less difficult than the 24% typical deposit required a year ago, the CML figures show.

Only 4% of first-time buyers now choose an interest-only mortgage compared with 30% before the financial crisis, when these loans were much more available from lenders.

This has meant buyers have be forced to save up before buying a home which, in turn, has pushed up the cost of renting, according to Jonathan Moore, director of flatsharing website Easyroommate.co.uk.

"The rental sector is groaning under the strain of the influx of frustrated buyers," he said.

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