NEW YORK (CNNMoney) -- Federal Reserve Chairman Ben Bernanke on Tuesday urged lawmakers to avoid the fiscal cliff by acting as soon as possible.
"Coming together to find fiscal solutions will not be easy, but the stakes are high," Bernanke said, speaking before the Economic Club of New York.
The Fed chief cited projections from the Congressional Budget Office that predict the $7 trillion combination of spending cuts and tax increases could send the U.S. economy toppling back into recession.
He also cited Europe's debt crisis as an obstacle to U.S. economic growth.
"Currently, uncertainties about the situation in Europe and especially about the prospects for federal fiscal policy seem to be weighing on the spending decisions of households and businesses as well as on financial conditions," Bernanke said.
"Such uncertainties will only be increased by discord and delay," he added.At its September meeting, the Federal Reserve launched a third round of quantitative easing, which entails buying $40 billion in mortgage-backed securities each month until the outlook for the job market improves "substantially."
Bernanke added little clarity to that vague statement in his speech Tuesday.
"In other words, we will want to be sure that the recovery is established before we begin to normalize policy," he said.
The Fed has been trying to stimulate the economy for over three years now, and has exhausted its usual tool by keeping interest rates near zero since late 2008. Quantitative easing is an unconventional way of trying to lower rates further.
cnn.com
"Coming together to find fiscal solutions will not be easy, but the stakes are high," Bernanke said, speaking before the Economic Club of New York.
The Fed chief cited projections from the Congressional Budget Office that predict the $7 trillion combination of spending cuts and tax increases could send the U.S. economy toppling back into recession.
He also cited Europe's debt crisis as an obstacle to U.S. economic growth.
"Currently, uncertainties about the situation in Europe and especially about the prospects for federal fiscal policy seem to be weighing on the spending decisions of households and businesses as well as on financial conditions," Bernanke said.
"Such uncertainties will only be increased by discord and delay," he added.At its September meeting, the Federal Reserve launched a third round of quantitative easing, which entails buying $40 billion in mortgage-backed securities each month until the outlook for the job market improves "substantially."
Bernanke added little clarity to that vague statement in his speech Tuesday.
"In other words, we will want to be sure that the recovery is established before we begin to normalize policy," he said.
The Fed has been trying to stimulate the economy for over three years now, and has exhausted its usual tool by keeping interest rates near zero since late 2008. Quantitative easing is an unconventional way of trying to lower rates further.
cnn.com
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