Bernanke promises more help if U.S. economy doesn't improve
U.S. Federal Reserve chairman Ben Bernanke again pledged Friday that the Fed stood ready to provide more help to the beleaguered American economy. But he stopped short of committing to any immediate move.
In a closely-watched speech at a symposium of central bankers in Jackson Hole, Wyo., Bernanke said the Fed "should not rule out" new policies to boost hiring and turn around the economy. But he noted that intervention carried risks.
Bernanke's speech painted a bleak picture of the economic recovery so far, saying it was "far from satisfactory." He said the persistently high U.S. unemployment rate — currently at 8.3 per cent — was of "grave concern."
"It is important to achieve further progress, particularly in the labour market," he said. "The stagnation of the labour market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years."
The most recent U.S. GDP report released earlier this week showed annualized growth of just 1.7 per cent.
"We have seen no net improvement in the unemployment rate since January," he said.
"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."
The Federal Reserve long ago slashed its key overnight lending rate to a record low of zero-to-0.25 per cent and has kept it there for more than three years in a bid to jump-start the economy, so it can't lower its benchmark rate any further.
The most dramatic stimulus tool the Fed has left would be another round of bond buying to try to lower long-term interest rates.
The Fed chair cited studies that said the Federal Reserve's two previous rounds of bond-buying created at least two million jobs.
"Bernanke has taken a further step along the path to more policy stimulus, most likely a third round of asset purchases to be announced at the mid-September [Fed] meeting," said Paul Dales, senior U.S. economist at Capital Economics, in a morning note.
With files from The Associated Press