90 seconds at 9am: Drought may hit GDP; Bernanke sees moderate US growth, low rates

Bernard Hickey details the key news overnight in 90 seconds at 9am in association with BNZ, including news that there are fears that the drought in Northland and parts of the central North Island will significantly cut dairy output and therefore reduce GDP growth, Stuff reports. Some economists see a 2% fall in dairy output in the season just finishing. That could suppress GDP growth in the March and June quarters. Meanwhile, there's news overnight on the United States economy, where the US Federal Reserve's Beige book shows the economy growing, albeit moderately. Lending growth is weak and the employment outlook is subdued. However, US Federal Reserve Chairman Ben Bernanke told Congress overnight he still thought official interest rates needed to be kept 'exceptionally low' for an 'extended period'. Many are watching for any signs that the Federal Reserve will hike interest rates there, given they are the base for all the world's rates. But it was notable that Bernanke did not include the 'exceptionally low for an extended period' phrase until asked by Congressional leaders. Interest rates are no doubt rising around the world as the recovery begins.