WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Tuesday the global economy is being hit hard by a financial crisis and how governments respond will determine the timing and strength of recovery.
"For almost a year and a half the global financial system has been under extraordinary stress -- stress that has now decisively spilled over to the global economy more broadly," he said in remarks prepared for delivery at the London School of Economics.
"The damage, in terms of lost output, lost jobs, and lost wealth, is already substantial," he said.
In his first policy speech since early December, Bernanke said the Fed still has "powerful tools" that could be expanded to spur a rebound even though it has dropped benchmark interest rates to near zero.
(Reporting by Mark Felsenthal; Editing by James Dalgleish)
