The growing U.S. budget deficit and low national savings rate pose risks to the U.S. financial system and the overall economy, Federal Reserve President Timothy Geithner said on Thursday. "The current deterioration in the U.S. fiscal position and the acute decline in the net national savings rate represent risks to the financial system and the economy as a whole," Geithner told the New York Banker's Association. Those risks were in turn magnified by the size of the U.S. current account deficit and the unprecedented scale of financing needed to fund it, he added.
Thus while the present economic environment looked quite favorable, it was important that the U.S. strengthen risk management and the resilience of critical market infrastructure, said Geithner. He also noted that U.S. inflation was very low and the outlook was for only very modest prices rises ahead. This was Geithner's first major speech since becoming NY Fed President.|||www..com