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Bernanke: Economic weakness to continue
(Agencies)
Updated: 2008-12-02 10:25

.S Treasury Secretary Henry Paulson arrives to speak about the economy at the Fortune 500 Forum in Washington December 1, 2008. Paulson said on Monday that more programs were being developed to stimulate lending but warned a severe financial crisis is stubbornly persisting. [Agencies]

"I wouldn't count out a half-percentage point cut," said former Federal Reserve Governor Lyle Gramley. "It may be a good thing to do at this point, because you want to tell the public you're using all the tools at your command."

Rate-cut Alternatives

Instead of cutting rates, the Fed could take further steps to unfreeze credit markets, Bernanke said.

Since last December, the Fed has lent out trillions of dollars to banks, businesses, mutual funds and foreign central banks in an effort to boost liquidity in the financial markets and keep the economy from collapsing.

In addition, Bernanke said the Fed could help achieve financial stability by continuing to buy up asset-backed securities and by backstopping liquidity in financial markets.