Federal Reserve Chairman Ben Bernanke said in a statement Tuesday that financial conditions “remain strained” in the country with some “key funding and securitization markets” showing only minor signs of recovery, while lagging housing prices and skyrocketing oil expenses continue to create significant risks to growth.

“Overall economic growth was quite slow but apparently positive in both the fourth quarter of 2007 and the first quarter of this year,” Bernanke concluded. “Activity during the current quarter is also likely to be relatively weak. We may see somewhat better economic conditions during the second half of 2008, reflecting the effects of monetary and fiscal stimulus, reduced drag from residential construction, further progress in the repair of financial and credit markets, and still solid demand from abroad. This baseline forecast is consistent with our recently released projections, which also see growth picking up further in 2009.”

Bernanke, who has reduced the federal funds rate several times since late last year, hinted Tuesday to the effect that monetary policy will remain somewhat consistent in the coming months.

“Our decisive policy actions were premised on the view that a more gradual reduction in short-term rates could well have failed to contain the financial and economic problems confronting us,” Bernanke said. “For now, policy seems well positioned to promote moderate growth and price stability over time. We will, of course, be watching the evolving situation closely and are prepared to act as needed to meet our dual mandate.” Kerri Panchuk | 06.03.08