Bernanke defends low interest rates

  • Ben Bernanke has defended the ongoing low-interest-rate policies of the U.S. Federal Reserve and central banks across Europe, stating they are needed to help boost the global economy.

    The Fed governor's comments follow concerns raised by analysts that the low rates could devaluate the currencies of advanced nations.

    U.S. rates have sat at between 0 percent and 0.25 percent since December 2008.

    Speaking at the London School of Economics on Monday, Bernanke said: "Because stronger growth in each (advanced) economy confers beneficial spillovers to trading policies, these policies are not 'beggar-thy-neighbour' but rather 'enrich-thy-neighbour' actions."

    The U.S. Federal Reserve has vowed to keep interest rates at the record low levels until the unemployment rate drops below 6.5 percent. Last month, the U.S. jobless rate was 7.7 percent.

    According to analysts, if the currency of an advanced nation weakens against its competitor exporters, including those from the developing world, its goods will become cheaper, resulting in a price advantage.

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