Fed chief backs US spending plan as markets clutch at latest straw

Standing left to right – Mr. Dinesh Jebamani (Chief Manager Liability Product Management and New Age Media – Seylan Bank), Mr.Sudesh Peiris (Senior Manager – Digital Banking Channels – Seylan Bank), Ms. S.Senevirathne (Representative of the Revenue Department – Western Province), Mr. Tilan Wijeyesekera (Deputy General Manager – Retail Banking – Seylan Bank) and Mr. Malik Wickremanayaka (Deputy General Manager – Operations – Seylan Bank)

WASHINGTON, October 21, 2008 (AFP) – The head of the US Federal Reserve backed a stimulus plan for the flagging American economy, buoying stock markets despite gloomy unemployment figures and fears the rebound could be limited.

Asian markets tracked gains on Wall Street, where stocks soared after Fed chief Ben Bernanke said US lawmakers should consider a second stimulus plan, warning the world’s largest economy risked a “protracted slowdown”.

His endorsement came after a forecast that the financial crisis could push worldwide unemployment to a record high and as new bank rescue efforts were unveiled in France and Sweden.

“With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate,” he told the House of Representatives budget committee.

When asked to say if the US economy was in recession, he replied only there was a “very serious slowdown in the economy which has very serious consequences for the public.”

The fallout for workers was made clear in a report by the International Labour Organisation, which warned that the number of unemployed worldwide would increase from 190 million