WASHINGTON (AP) — Chairman Ben Bernanke said the Federal Reserve is prepared to take further steps to lift the U.S. economy if it weakens. But he didn't signal any imminent action in testimony before a congressional panel Thursday.
Bernanke said the European debt crisis poses significant risks to the U.S. financial markets. He noted that U.S. unemployment remains high and the outlook for inflation subdued.
But Bernanke said that he expects economic growth to continue at a moderate pace this year.
"As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate," he told the congressional Joint Economic Committee.
The Fed could buy more bonds to lower long-term interest rates, which would encourage more borrowing and spending. Or it could extend its plan to keep short-term rates near zero beyond late 2014.
But most economists don't expect further moves at the Fed's next policy meeting June 19-20, despite some signals from other Fed members in recent days.
For one thing, long-term rates have already touched record lows. Even if rates did decline further, analysts say they might have little effect on the economy.
And Bernanke may face pressure not to pursue further stimulus before the November election because such steps could be perceived as helping President Barack Obama win re-election.
John Ryding and Conrad DeQuadros, economists at RDQ Economics, said there was nothing in the testimony to "tip Bernanke's hand" ahead of the June meeting of the Federal Open Markets Committee, the Fed's policy committee.
"Yes the Fed chairman said the Fed stands ready to act if Europe poses a threat to the U.S. financial system or the economy. However, he gave no specifics and essentially repeated the language from the FOMC statement," they wrote in a note to clients.
The economy added 252,000 jobs a month from December through February. Since then, job growth has slowed to a lackluster 96,000 a month. In May, U.S. employers added just 69,000 jobs—the fewest in a year.
