Market stress keeps economic outlook murky: Bernanke

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WASHINGTON, Nov 29, 2007 (AFP) – The Federal Reserve sees a high degree of uncertainty in the US economic outlook and is worried that strains in financial markets may lead to broader problems, Fed chairman Ben Bernanke said Thursday. In remarks prepared for delivery to a business group in Charlotte, North Carolina, Bernanke said policymakers are carefully monitoring “mixed” economic data, with a depressed housing sector, strong labor market and consumer spending “on the soft side.”

Bernanke said the central bank’s economic outlook has been “importantly affected over the past month by renewed turbulence in the financial markets” as well.

That turbulence has “partially reversed” the market improvements of September and October and created tighter financial conditions which have the “potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors.”

“Needless to say, the Federal Reserve is following the evolution of financial conditions carefully, with particular attention to the question of how strains in financial markets might affect the broader economy,” according to the text of his remarks released in Washington.

Bernanke said the Fed would be paying “particular attent