Bernanke: Lower Interest Rates Are "Feasible"

The Fed chief's remarks failed to comfort Wall Street. The Dow Jones industrials plunged nearly 680 points.

Given the limits to how low the Fed can go in reducing interest rates, the central bank over the past year has resorted to a flurry of other radical — and often unprecedented actions — with the hope of busting through credit jams and getting financial markets operating more normally.

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It has ramped up cash and other types of loans to financial institutions, started buying mounds of short-term debt that companies rely on for day-to-day operations like paying salaries and buying supplies, and expanded its emergency lending program to investment firms.

Just last week the Fed announced two new programs aimed at increasing the availability and lowering the costs of credit card loans, auto loans, student loans and home mortgages.

The Fed last week said it would purchase $200 billion in securities backed by different types of consumer debt. That market essentially froze in October, making such loans harder to obtain while carrying higher interest rates.

The Fed also said it would spend $500 billion to purchase mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac, and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks.

Bernanke said the Fed will continue to look for innovative ways to break through the credit logjams.

"We at the Federal Reserve and our colleagues at other federal agencies will carefully monitor the conditions of all key financial institutions and stand ready to act as needed to preserve their viability in this difficult financial environment," Bernanke said.

The NBER — a private, nonprofit research organization — said its group of academic economists who determine business cycles met on Friday and decided that the country tipped into recession in December 2007. The economy contracted in the final quarter of last year.