WASHINGTON (MNI) – The following is a transcript from the news
conference with Federal Reserve Chairman Ben Bernanke, who said
developments in Japan could have a moderate temporary impact on the U.S.
economy:

REPORTER: I would like to ask about uncertainties in the global
economy or down effects. In my notes from the meeting, the committee
noted — what is the latest assessment on the risks and uncertainties
such as the tragedy in Japan and crisis in Europe and the problems in
the Middle East and what are the effects on the world economy?

CHAIRMAN BERNANKE: One of the things that our projections include,
we are only producing the forecast today. With our minutes in three
weeks we will include the full detailed projections as we normally do.

One of the things that we include is the views of the participants
on the amount of uncertainty there is in the forecast going forward. And
I think I can say without too much fear of giving away the secret that
FOMC participants do see quite a bit of uncertainty in the world going
forward. And a lot of that uncertainty is coming from global factors.

I have already talked about Middle Eastern, Africa, emerging
markets which affected commodity prices and other things, the European
situation continues. We are watching that very carefully.

Obviously, you asked about Japan. Let me first say, you know, that
I have had a lot of contact with my Japanese counterparts, Central Bank
governor Shirakawa and other people in the Japanese government. We
collaborated with them on the foreign exchange intervention, as you
know.

And we are very admiring of the courage of the Japanese people in
responding to these situations. And of the Central Bank of Japan has
done a good job in providing liquidity and helping to stabilize
financial markets in what are very, very significant disturbances to the
economy.

The implications for Japan have been discussed at some length. I
think Governor Shirakawa talked about them. In the near term there will
be a decline in the Japanese output in the destruction, reflecting
electricity problems, et cetera.

We believe that will be relatively temporary and the economy will
start to come back, but, of course, this is a major blow and it will
take a lot of effort on the part of the Japanese people to restore the
economy and to recover from the damage that was done by the tragedy.

For the United States, we are looking at this very carefully. Thus
far, the main impact of the Japanese situation on the U.S. economy has
been through supply chains. We have noted some automobile companies, for
example, that have had difficulty getting certain components which are
manufactured mostly or entirely in Japan.

And that has led a number of companies to announce that they would
restrain production for a time. So there may be some moderate effect on
the U.S. economy, but we expect it to be moderate and to be temporary.

Again, the most important issue here is the recovery of Japan and
our good wishes go out to the Japanese people and their efforts to
overcome the adversity that they are facing.

** Market News International Washington Bureau: (202) 371-2121 **

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