Sept. 4, 2012 – Federal Reserve Chairman Ben Bernanke, speaking Friday at an annual economic conference in Jackson Hole, Wyo., emphasized the severity of current economic challenges, but stopped short of citing any new actions the Fed will take to spur the recovery.
While Bernanke did not offer any specifics about what the Federal Open Market Committee may decide to do at the conclusion of its upcoming Sept. 12-13 meeting, he did reiterate that the Fed is prepared to do more “as needed” to stimulate stronger growth.
Bernanke said that current economic headwinds include a less-than-optimal housing market; fiscal policy issues at the federal and state and local levels; uncertainties relating to the U.S. “fiscal cliff” and debt ceiling; tight borrowing conditions; and fiscal developments in Europe. While the latter issue is more problematic for the Europeans, Bernanke said, the effects on the U.S. economy “are significant.”
Bernanke also defended policy actions the Fed has taken to help lift the economy so far. He cited data showing that the Fed’s large-scale asset purchases “have significantly lowered long-term Treasury yields,” while leading to the creation of roughly 2 million jobs. “It is important to achieve further progress, particularly in the labor market,” he said.
The Fed chairman also acknowledged that “making monetary policy with nontraditional tools is challenging.” He said the central bank’s use of such tools “remains limited” and that it always “carefully compares the expected benefits and costs of proposed policy actions.”
Bernanke also urged Congress to address the current economic and fiscal situation, but cautioned that lawmakers “should take care to avoid a sharp near-term fiscal contraction that could endanger the recovery.”
A full transcript of Bernanke’s speech can be viewed here.