June 7 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke told lawmakers that further rounds of stimulus could boost the economy, yet may have “diminishing returns.”
“We continue to believe that potentially these sorts of measures could still add some additional accommodation, some additional support to the economy,” Bernanke said today in response to questions from Congress. “There may be some diminishing returns and that would be a consideration we’d have to look at” as interest rates are already low.
Bernanke said that the Fed’s analysis of previous rounds of large-scale asset purchases showed that “they lowered the spreads between private rates and government rates,” thus lowering borrowing costs for corporations, on mortgages, and increasing stock prices.
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