Bernanke raring to forestall recession

In his first comments in the New Year, Federal Reserve chairman Ben S. Bernanke said the central bank is ready to take "substantive additional action" to prevent a weak housing market and a lagging credit market from sending the economy into a recession. "In light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary," he said in a speech to the Women in Housing and Finance and Exchequer Club Joint Luncheon in Washington this afternoon. He added that further rate cuts would be needed to "support growth and to provide adequate insurance against downside risks." Mr. Bernanke predicted that consumer spending and economic growth would slow as the year progresses, spurred by higher oil prices, lower equity prices, and softening home values. The central bank cut the key interest rates three times last year. The final cut, on Dec. 11, left the rate at 4.25%. The remarks, which increased the expectations of investors that Federal Reserve officials will lower the federal funds rate at their next meeting on Jan. 29 and 30, sent the markets ahead in late-afternoon trading. The Dow Jones Industrial Average was up 156.80 to 12,892.11. The Nasdaq rose 17.63 to 2,492.18. The Standard & Poor's 500 Index gained 15.21 to 1,424.34.