Federal Reserve Chairman Ben Bernanke says the central bank is prepared to take further steps to lift the U.S. economy if it weakens. But he didn't signal any imminent action in his testimony before a congressional panel today.
Bernanke says the European debt crisis poses significant risks to the U.S. financial markets. And he noted that U.S. unemployment remains high and the outlook for inflation subdued.
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. They note that long-term rates have already touched record lows. Even if rates did decline further, analysts say they might have little effect on the economy.
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 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.
Three Fed officials yesterday indicated that the Fed may need to do more to help the economy. (AP)
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