Ben S. Bernanke told Congress the central bank

Federal Reserve Chairman Ben S. Bernanke told Congress the central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling.

“The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” Bernanke told the House Financial Services Committee in Washington today. The Fed “remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.


The comments are Bernanke’s first since a government report on July 8 showed employers added 18,000 jobs in June, less than the most pessimistic forecast in a Bloomberg News survey of economists. Bernanke said “disappointing” job growth in May and June was partly a result of temporary effects, such as high energy prices, and he predicted in response to a question that the pace of economic expansion would accelerate above 3 percent in the second half of 2011.

“Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation,” Bernanke said in his prepared remarks. He also said that “the economy could evolve in a way that would warrant a move toward less-accommodative policy.” Read More...