WASHINGTON, Feb. 15--Federal Reserve chairman Ben Bernanke has warned that the outlook for the US economy is deteriorating.
He said the housing and credit market turmoil had hit the economy and added that a weak labor market could further undermine consumer spending, BBC reported.
Given the risks facing the economy, Bernanke signaled that additional US interest rate cuts were likely.
The central bank began lowering the cost of borrowing in September and cut rates dramatically in January.
Bernanke did not mention the risk of a recession and said he expected the economy to pick up later this year after a period of “sluggish growth“.
“The outlook for the economy has worsened in recent months, and the downside risks to growth have increased,“ Bernanke told the Senate Banking Committee.
“To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so.“
He said the Federal Reserve “will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks“.
The Fed has cut interest rates substantially since September last year to bring its key rate to 3 percent from 5.25 percent.
This included an unscheduled emergency rate cut on 23 January of three quarters of a percentage point--its biggest in 25 years.
Meanwhile, former US Federal Reserve Chairman Alan Greenspan on Thursday said the US economy is “clearly on the edge“ of a recession, Reuters reported.
Greenspan said the economy will continue to erode until there is a stabilization of US housing prices.
“We have a long way to go“ before housing prices hit a bottom, Greenspan told energy executives at the CERA conference.
High oil prices are dragging on the economy, but the fact that they haven’t done more damage shows its resiliency.
“It’s a burden now,“ Greenspan said. He added that it’s “quite remarkable“ that the US economy is “able to do reasonably well“ with oil prices near historic highs.
Crude oil futures hit above $95 a barrel on Thursday and went above $100 in early January.
Greenspan again--as he had last month--said that the likelihood of the US economy going into recession was “50 percent or better.“
He said the US economy was growing at “stall speed.“
“Stagflation is too strong a term for what we are on the edge of,“ Greenspan said.

A boy looks at corn, rice and millet at the food market in Maradi, Niger. (File Photo)

ROME, Feb. 15--The rising price of cereals such as wheat and maize is a “major global concern“, the United Nations’ Food and Agriculture Organization (FAO) says.
Poor countries could see their cereal import bill rise by more than a third. Africa as a whole is expected to see an estimated 49 percent increase this year, reported BBC.
International wheat prices have risen 83 percent in the past 12 months.
Demand from emerging countries such as China, and droughts and flooding have pushed cereal prices to record highs.
It is estimated poor countries will pay a record $33.1 billion for cereal imports in the year to July 2008. This is despite a fall in the total amount they will import.
In an attempt to limit the impact of rising prices on their populations, governments have lowered import tariffs, raised food subsidies and imposed duties on food exports.
The rising price of wheat, maize and rice will push up the cost of basic foods and this will affect the world’s vulnerable populations the most, the FAO said.
It warned 36 countries around the world were facing a food crisis.
The highest number of countries facing a severe shortage of foodÑ21--is in Africa.
Lesotho, Somalia and Swaziland are said to be facing an “exceptional shortfall“ in food supply after years of adverse weather.
The FAO this week launched an appeal for $87 million of emergency assistance to help flood-affected populations in Mozambique, Zimbabwe, Zambia and Malawi.
Farmers in flooded areas are in urgent need of seeds to begin replanting, with only two months to the end of the cropping season, the FAO said.

Dmitry Medvedev

KRASNOYARSK, Russia, Feb. 15--The overwhelming favorite to win Russia’s presidential election on March 2, Dmitry Medvedev, on Friday called for a lowering of state interference in the Russian economy.
Outlining his economic program in a speech at a forum in the Siberian city of Krasnoyarsk, Medvedev also stressed the importance of modernizing Russia’s economy and ensuring an independent judiciary.
“Most of the bureaucrats on boards of directors should not be there,“ Medvedev said in comments reported by Russian news agencies and broadcast on the Vesti-24 news channel.
“They should be replaced by genuinely independent directors hired by the state to work in its interests,“ Medvedev said, referring to the massive state industrial corporations set up under President Vladimir Putin, AFP said.
“A significant share of the functions carried out by state organs should be given over to the private sector,“ Medvedev said in comments that appeared to show some differences with Putin’s economic outlook.
Medvedev is Russia’s first deputy prime minister and the chairman of state-controlled gas giant Gazprom. A former law professor, he is seen as more economically liberal than other key players in the Kremlin elite.
He was put forward as a candidate by Putin and the ruling United Russia party following parliamentary elections in December. Putin has since hinted he could retain a major role in power as prime minister if Medvedev is elected.
Russia has seen a strengthening of the state’s role in the economy in recent years, particularly in the lucrative energy sector and in industries such as aerospace, shipbuilding and new technologies.
But Medvedev also echoed many of the broad economic aims outlined by Putin earlier this month, including the need to move Russia away from a dependence on raw materials towards innovation and to create a larger middle class.
“I think these targets are ambitious but, in my view, they are completely realistic,“ Medvedev said. He said his programme as president would be “institutions, infrastructure, innovation and investment.“

Swiss banking giant UBS headquarters in Zurich.

ZURICH, Switzerland, Feb. 15--Swiss banking giant UBS plunged to its first-ever full-year net loss on Thursday after losing $18 billion in the US subprime mortgage crisis.
According to AFP, bank chairman Marcel Rohner said the losses were “unacceptable“.
UBS revealed a net loss of 4.4 billion Swiss francs ($4.0 billion, 2.7 billion euros) in 2007, compared to a profit of 12.3 billion Swiss francs in 2006.
“We are obliged to confirm these unacceptable results,“ Rohner told a telephone conference on the figures.
“While most of our businesses continued to be very profitable, the sudden and serious deterioration in the US housing market, in combination with our large exposure in sub-prime mortgage-related securities and derivatives, has driven us into loss for the year,“ he said.
Analysts said the losses were in line with expectations as UBS had already said two weeks ago it would post a full year loss of around four billion francs.
Helvea analyst Peter Thorne warned that UBS is less attractive to investors than its rival Credit Suisse, which on Tuesday announced full year profits of 8.5 billion Swiss francs after limiting its subprime exposure.
UBS’s balance sheet “remains a worry for investors,“ the London-based analyst said.
“Our preference for betting on a recovery in financials is with Credit Suisse where exposures are lower and known, and management has for more credibility,“ Thorne added.
In the fourth quarter alone, UBS lost 12.45 billion Swiss francs against a profit of 3.4 billion francs in the same period a year earlier.
“Last year was one of the most difficult in our history,“ Rohner said.
In the fourth quarter, writedowns linked to the US housing market amounted to $13.7 billion.
For the year as a whole, its exposure was 18.1 billion dollars, making UBS the third-worst hit bank after Wall Street giants Merrill Lynch, with 19.4 billion dollars, and Citigroup 21.1 billion dollars.
UBS said it expected 2008 to be “another difficult year“ given plunging stock market values and growing fears of a recession in the United States.

TOKYO, Feb. 15--Some of the world’s top companies vowed Friday to step up their efforts to cut greenhouse gas emissions, saying governments were failing to show sufficient leadership in the fight against global warming.
A dozen corporations including Sony Corp., Nokia Corp., Nike Inc. and Hewlett-Packard Co. issued an urgent call for firms around the world to reduce the damage they inflict on the planet and to promote a “low carbon lifestyle“, AFP reported.
“There is no doubt that climate change is one of the most important issues of our time,“ Sony chief executive Howard Stringer told a meeting hosted by the Japanese electronics giant and the WWF environmental group.
“Governments are more easily distracted by the crisis of today than the crisis of tomorrow,“ he said. “We need to act now.“ The companies, which describe themselves as “Climate Savers“, did not announce any new goals for reducing their carbon dioxide emissions as they have already committed to individual targets.
Instead they pledged to urge their business partners and other companies to follow their lead, to develop energy efficient products and to encourage their customers to lead an environmentally friendly lifestyle.
“We are moving into a carbon-constrained world, a low carbon economy--a new economy,“ said James Leape, director general of WWF International.
“We need champions. There are precious few political leaders in this world yet who are stepping up to the level of action that is required.“
There is also an economic rationale for reducing greenhouse gas emissions, business leaders said.
“I don’t think...any company is going to be able to survive if it is not working in a sustainable way,“ said Jaime Santafe, an environment advisor at Swiss-based packaging giant Tetra Pak.
The captains of industry issued their call as officials from the United Nations and 21 countries held a second day of talks in Tokyo as part of efforts to forge a new deal on fighting global warming by the end of next year.
The captains of industry issued their call as officials from the United Nations and 21 countries held a second day of talks in Tokyo as part of efforts to forge a new deal on fighting global warming by the end of next year.
The closed-door talks came ahead of negotiations in Bangkok from March 31 to April 4 on reaching a deal to succeed the landmark Kyoto Protocol, whose obligations on slashing gas emissions expire in 2012.
The world’s second biggest economy after the United States, Japan is the home of the Kyoto Protocol, the landmark 1997 treaty that mandated cuts in greenhouse gas emissions heating up the planet.
But Japan is far behind in meeting its Kyoto commitments. The government has refused to legally bind companies to cap gas emissions, fearing that it could jeopardize the economy’s slow recovery from recession in the 1990s.

NEW DELHI, India, Feb. 15--Indian Prime Minister Manmohan Singh on Friday said he was confident that the country will be able to sustain nine percent economic growth despite a possible global slowdown.
“I am confident that this year too we will be able to sustain nine percent growth and hold the price line at acceptable levels,“ Singh told a gathering of business leaders in New Delhi.
Singh was quoted by AFP as saying that the government was aware of concerns about a slowdown because of a global credit crunch.
“I do not see any reason why we cannot sustain nine percent growth even in the face of a global slowdown,“ Singh said.
The government has forecast a growth of 8.7 percent in the current financial year ending March as agriculture and manufacturing output slowed from last year’s rapid pace.
In the first half of the fiscal year ending September, the economy expanded 9.1 percent and has grown at an annual average rate of 8.6 percent in the past four years.

TOKYO, Feb. 15--The Bank of Japan’s rate-setting committee has voted unanimously to keep interest rates on hold at 0.5 percent, in a widely expected move.
Despite data on Thursday showing strong economic growth in the last quarter of 2007, analysts said the bank was concerned by recession fears in the US.
Rates have now been at 0.5 percent for one year, despite the bank warning they may need to rise to combat inflation, BBC said.
The economy grew at an annualized rate of 3.7 percent in the last three months of 2007.
This was stronger than most market expectations and was led by strong exports and business demand.
Bank of Japan governor Toshihiko Fukui has repeatedly warned of the inflation risks of keeping rates at 0.5 percent, but analysts say any rate rise is now unlikely until the full impact of the slowdown in the US economy is revealed.
Some commentators even say rates may be cut, at least temporarily, before the summer.
“Despite stronger-than-expected [Japanese] growth in the October-December quarter, we anticipate mini recessions both in the US and Japan in the first half of 2008,“ said Morgan Stanley economist Takehiro Sato.
“While the recession should end quickly with a rebound by the US in the second half of 2008, sluggish domestic demand is likely to curtail momentum in Japan.“