Bernanke urges countries to fix imbalances
WASHINGTON - The United States and other countries must work together to right a skewed pattern of trade and investment around the globe, a move that would help worldwide economic stability, Federal Reserve chairman Ben Bernanke suggested yesterday.
So-called "global imbalances" occur when countries such as the United States run up bloated trade deficits, while other countries, such as China and oil-producing nations, produce big trade surpluses. The International Monetary Fund has been leading efforts to reduce lopsided trade and investment patterns. As for prospects of fixing the problem, Bernanke said: "Signs of progress have appeared but . . . most countries have only just begun to undertake the policy changes that will ultimately be needed."
He spoke at a conference in Berlin. Copies of his remarks were made available in Washington.
Worldwide long-term interest rates, which had been low for a long period, have gone up recently "in part because of the greater recent volatility in financial markets and investors' demands for increased compensation for risk-taking," Bernanke observed.