Bernanke says rate cuts are 'feasible'

U.S. Federal Reserve Chairman Ben Bernanke said Monday that further reductions in the current lending rate are possible.

Bernanke directly addressed the addressed the topic in a speech for the Greater Austin Chamber of Commerce in Texas, saying further rate reductions are certainly feasible, but pointing out that with the current target rate at 1 percent, the scope for using conventional interest rate policies to support the economy is obviously limited.

Bernanke said the central bank must take all steps necessary to minimize systemic risk.

The bank can adjust interest rates -- although rates cannot fall below zero, he said -- and provide liquidity, a step that remains effective, he said.

The Fed's options to help the economy also include purchasing longer term Treasury securities to prop up yields, which may spur aggregate demand, he said.

In that manner, the Fed's announced plans last week to purchase $100 billion in government-sponsored enterprise debt and $500 billion in GSE mortgage-backed securities. It is encouraging that the announcement of that action was met by a fall in mortgage interest rates, he said.