Federal Reserve Chairman Ben Bernanke testified before the House Budget Committee today and urged Congress to implement a fiscal stimulus package as quickly as possible to help boost consumer spending. The overall goal of such a move would be to ward off a potential recession, which some economists insist the U.S. economy is heading toward or already in. Chairman Bernanke maintains that while the economy is indeed in a slump, he does not believe it will fall into a recession.
One potential stimulus package would include a series of tax cuts as well as increased funding for unemployment benefits. Projected ranges for such a program are $50 billion to $75 billion. Chairman Bernanke also encouraged Congress to ensure any stimulus package it enacts is on a temporary basis.
It is also widely anticipated the central bank will cut the federal funds rate by one-half a percentage point at its next meeting on January 30. Such a cut would put the rate at 3.75 percent, the lowest level in nearly two and a half years. The federal funds rate is an overnight bank lending rate that affects rates on various types of loans such as variable-rate mortgages and credit card rates, among others. The rate may also impact rates on various investment and insurance products offered by life insurance companies.