JACKSON HOLE, Wyo. (AP) ? Chairman Ben Bernanke made clear Friday that the Federal Reserve will do more to boost the economy because of high U.S. unemployment and an economic recovery that remains “far from satisfactory.”
He also argued that the Fed’s moves so far to keep interest rates at record lows and encourage borrowing and spending have helped bolster the economy.
Bernanke stopped short of committing the Fed to any specific move, such as another round of bond purchases to lower long-term rates. But in a speech at an annual Fed conference in Jackson Hole, Wyo., Bernanke said that even with rates at super-lows, the Fed can do more.
He noted that further action carries risks but says the Fed can manage them. The Fed “should not rule out” new policies to improve the job market, Bernanke says.
Bernanke defended Fed actions so far to stimulate the economy. He cites studies showing the Fed’s first two rounds of bond purchases created at least 2 million jobs.
“It is important to achieve further progress, particularly in the labor market,” Bernanke said. “The Federal Reserve will provide additional policy accommodation as needed.”
The U.S. economy is again struggling to grow. It expanded at a tepid 1.7 percent annual rate in the April-June quarter, the government estimated Wednesday.
Hopes for further Fed action rose last week when the central bank released minutes of its July 31-Aug. 1 meeting. It showed that officials spoke with increased urgency about the need to provide more help for the U.S. economy.
The Fed’s policy committee decided that action “would likely be warranted fairly soon” unless it saw evidence of “a substantial and sustainable strengthening” of the economy. The comment raised expectations that the Fed could announce a move as soon as its next meeting Sept. 12-13.
Some analysts have cautioned that slightly brighter economic news since then may diminish the need for immediate Fed action. The economy created 163,000 jobs in July, the best burst of hiring since February. And Americans stepped up spending last month after earning a little more.
The most dramatic tool the Fed has left in its arsenal would be another round of bond buying, to try to lower long-term interest rates.
Still, Bernanke’s comments made clear that the economy has a long way back to full health.
“Unless the economy begins to grow more quickly than it has recently, the unemployment rate is likely to remain far above levels consistent with maximum employment for some time,” he said.
At the end of every August, economists and central bankers convene in the Rocky Mountains at a symposium organized by the Federal Reserve Bank of Kansas City. They present papers and argue about economic issues. But mostly, they wait to see what the Fed chairman has to say.
In August 2010, Bernanke hinted during his remarks at Jackson Hole that the Fed might begin a second round of bond purchases, a policy called quantitative easing, or QE2. The Fed started buying bonds three months later.
Many analysts think a third round of bond purchases ? QE3 ? would include both Treasurys and mortgage-backed securities.