Bernanke backs status quo on rates

Chairman Ben Bernanke says the United States Federal Reserve's low interest-rate policies are providing key support for an economy still struggling with high unemployment.

He is signalling that the Fed's efforts to keep borrowing costs low will continue.

Bernanke acknowledges that the Fed's aggressive program to buy US$85 billion a month in Treasurys and mortgage bonds to keep rates low could eventually ignite inflation or unsettle investors.

But he says those risks are contained for now.

Delivering the Fed's semi-annual report to Congress, Bernanke says the bond purchases are helping to sustain economic growth.

On budget policy, Bernanke urges Congress to replace the automatic spending cuts that are due to start Friday with more gradual reductions in budget deficits in the short run.

US consumer confidence rebounds

Americans' confidence in the economy rebounded in February, reversing three straight months of declines as shoppers began adjusting to a payroll tax hike last month.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index stands at 69.6, up from a revised 58.4 in January.

Economists had expected 60.5, according to research firm FactSet.

It was the highest reading since November's 71.5. Confidence has fallen since then as shoppers were worried about growing economic uncertainty.

The consumer confidence indicator is watched closely because consumer spending accounts for 70 per cent of US economic activity. The figure is still well below the 90 reading that indicates a healthy economy.

- AP