Bernanke 'must move on liquidity worries'

30 April 2008

Chairman of the Federal Reserve Ben Bernanke might need to redouble his efforts to inject liquidity into the money markets, Bloomberg reports.

Last December, the central bank introduced cash auctions in order to increase revenue flows for mortgage lenders - which, it was hoped, would have a knock-on effect on rates.

The base rate of interest has also been slashed in the US since the beginning of the credit crunch.

However, the London Interbank Offered Rate has now risen by 0.33 per cent in the last month.

Speaking to the news agency, Charles Lieberman at Capital Management commented: "There's clearly a need for the Fed to do more."

The analyst added that the "underlying problem" with US banks was that they were "still nervous" about lending to each other.

Dean Maki at Barclays added: "Liquidity remains an issue...the Fed's made pretty clear they're going to continue to attack those problems as needed.''

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