Federal Reserve (Fed) Chairman Ben Bernanke said in a letter to a U.S. senator that the central bank would act “as needed” to ease the impact of tightening credit on the U.S. economy. The letter was in response to two letters from Senator Charles Schumer (Democrat from New York) earlier this month expressing concern about the impact of tighter credit. “I want to assure you that the Federal Reserve, in cooperation with other federal agencies, is closely monitoring developments in financial markets,” Bernanke wrote. The Fed chairman indicated that the central bank already had taken steps to increase liquidity in the markets by cutting the discount rate for direct loans to banks by the Fed. Bernanke added that the Fed “is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.”
