May 5 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke offered lawmakers a “cautious” prediction that the U.S. gross domestic product will grow by 2 percent next year and 4 percent in 2011, Senator John Ensign said.
Bernanke said his prediction assumed financial markets will stabilize and strengthen, Ensign, a Nevada Republican, told reporters today. “He said, ‘but that’s a big question,’” Ensign said.
“He seemed to be more hopeful than positive that would happen,” Ensign said after Bernanke attended a weekly luncheon of Republican senators in the U.S. Capitol.
In January, the median range of Fed officials’ forecasts was for 2.5 percent to 3.3 percent GDP growth in 2010 and 3.8 percent to 5.0 percent growth in 2011.
Ensign, who is chairman of the Senate Republican Policy Committee, said Bernanke indicated that the $700 billion in financial rescue funds approved by Congress last year remains “adequate” to help address the financial crisis for the time being.
Bernanke “did not mention anything about coming back” for more rescue funds, Ensign said.
The senator also said that Bernanke heard remarks from lawmakers who are concerned that the Fed and Treasury Department may be working too closely together during the crisis, and need to observe more distance.
“That was a question,” Ensign said. “How is the Federal Reserve going to remain independent when it’s been so closely tied, especially with the Treasury Department? And Chairman Bernanke’s response was, during this time of national crisis, they’ve come out with a position, basically, that they need to work together with the Treasury, but, as soon as possible, to -- to get back to their complete independence.”
