Fed warns of prolonged pain

WATCH VIDEO

Source: CCTV.com | 10-08-2008 09:20

It was another day of misery on Wall Street. Stocks on Tuesday slumped in the afternoon trading, bringing the two-day decline in the Dow Jones Industrials to nearly 900 points.

Federal Reserve Chairman Ben Bernanke speaks to the National Association for Business Economics (NABE) about the current state of the economy in Washington, October 7, 2008.(Mitch Dumke/Reuters)

The Federal Reserve chief says the pain will continue.

On Wall Street, stocks ended lower for the fifth straight session. The Dow Jones lost more than 500 points. The drop came a day after the blue chips fell below 10-thousand for the first time in four years. All

the major indexes also slid more than five percent on Tuesday.

Analysts say steps by the Fed to reinvigorate the dormant credit markets are not enough to calm nervous investors.

And Fed Chairman Ben Bernanke is warning that the financial crisis is likely to prolong the difficulty the economy is facing.

Ben Bernanke, Chairman of US Federal Reserve, said, "Economic activity is likely to be subdued during the remainder of this year and into next year. The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth."

His remarks are widely taken to be a sign that an interest rate cut is in the offing. However, Wall Street appears to have taken little comfort in this, choosing to focus instead on Bernanke's downbeat assessment of the economy.

Traders say further losses are likely this week, and markets worldwide are feeling the economic impact harder than expected.

Meanwhile, US President George W. Bush says although the economic meltdown has brought tough times for many Americans, the US is "going to come through" the crisis.

George W. Bush, US President, said, "I've been in close contact with European leaders. I was on the phone with them this morning, to ensure that our actions are closely coordinated. We live in a globalized world. We want to make sure we're effective at what we do."

There is growing pressure for the US government to do more than the 700 billion US dollar bailout package that was signed into law by Bush on Friday.

This weekend, financial ministers from G-7 countries will meet in Washington, in an effort to coordinate global efforts against the crisis.

Editor:Zhang Pengfei