JACKSON HOLE, Wyo. — Federal Reserve Chairman Ben Bernanke today said progress in bringing down U.S. unemployment was too slow and the central bank would act as needed to strengthen the economic recovery.
However, in a speech that suggested the Fed chief is taking seriously concerns about the possible effects of unconventional monetary policy, Mr. Bernanke did not explicitly signal any monetary easing was imminent.
That could likely disappoint a nervous Wall Street, which has been bidding up stock prices in recent weeks on expectations the U.S. central bank would launch a new stimulus program soon.
“It is important to achieve further progress, particularly in the labor market,” Mr. Bernanke said in a speech released ahead of the Kansas City Fed’s annual Jackson Hole symposium. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
That was a somewhat weaker hint of policy easing than the Fed delivered after its July 31-Aug. 1 meeting, when it said it would “closely monitor” incoming data as it pondered whether to ease monetary policy further.
The shift could reflect either an increased reluctance to embark on a third round of bond purchases given better recent economic data, or simply a desire to not front-run the Fed’s next policy meeting on Sept. 12-13.
Mr. Bernanke downplayed the potential risks from the Fed’s unconventional policies and argued that the asset purchases had been quite effective at boosting economic growth and fostering job creation. But he also stressed that the Fed was well aware of the risks of operating in uncharted territory.
In response to the financial crisis and recession of 2007-2009, the Fed cut official rates to zero and bought some $2.3 trillion in government and mortgage securities.