Of DOW JONES NEWSWIRES
DALLAS -(Dow Jones)- Federal Reserve Chairman Ben Bernanke Wednesday warned long-term interest rates could rise without a credible plan to cut the U.S. debt.
Answering a question on whether the rising fiscal deficits could bring higher inflation, Bernanke said that was not his concern as the Fed will 'not monetize the debt.' That's a term for printing money to finance the budget deficits.
But the Fed chief cautioned the budget imbalances could lead investors to lose faith in the U.S.'s ability to meet its debt obligations, leading to higher rates on Treasurys. That, in turn, could hurt a still-fragile recovery, Bernanke said.
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