The US markets closed mostly lower on Friday, after Federal Reserve Chairman Ben Bernanke defended the extraordinary measures undertaken by the central bank to boost the economic recovery. Ben Bernanke gave a full-throated defense in front of the economics profession to his nearly eight-year tenure running the central bank, arguing without near-zero interest rates, new communication methods and unconventional bond purchases the economy may have stagnated or even fallen back into recession. Bernanke acknowledged the economy has a long way to go to return to normal. Besides, Philadelphia Fed President Charles Plosser warned that the central bank may have to be aggressive in lifting interest rates and may have to chase market rates higher, if banks were to quickly release reserves. He also suggested the expectations of his colleagues by the end of 2016 that calls for Fed funds rates to be below 2% even when the job market is back to normal may be too low. Last month, the Fed stated that it would reduce its monthly asset purchases by $10 billion to $75 billion, but stressed it was committed to low interest rates until further declines in the unemployment rate. Interest rates have been near zero levels since the end of 2008, and the Fed’s balance sheet has swelled to over $4 trillion during Bernanke’s tenure.
Meanwhile, Richmond Fed President Jeffrey Lacker stated that the economy may grow at just 2% this year, instead of the 3% expansion expected. Lacker in a question-and-answer session suggested the Fed could lift interest rates as early as this year but added that 2015 was more likely the time in which it would make the first increase. Lacker notified that Federal Reserve policy makers will continue to weigh reductions to a bond-buying program aimed at stimulating growth because improvements in the job market are meeting the central bank’s objectives.
The Dow Jones Industrial Average added 28.64 points or 0.17 percent to 16,469.99, the S&P 500 was down 0.61 points or 0.03 percent to 1,831.37, while Nasdaq dropped 11.16 points or 0.27 percent to 4,131.91.
Indian ADRs closed mostly in green on Friday; Infosys was up 1.62%, Wipro was up 0.32%, Tata Motors was up 0.28% and ICICI Bank was up 0.18%. On the other hand, Dr. Reddy’s Lab was down 0.26%.
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