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Bernanke says Fed wont stay on sidelines

In Wyoming, Bernanke says Fed will not stay on sidelines

Aug 31, 2012 - The Associated Press

JACKSON � Chairman Ben Bernanke made clear Friday that the Federal Reserve will do more to boost the economy because of high U.S. unemployment and an economic recovery that remains �far from satisfactory.�

He also argued that the Fed�s moves so far to keep interest rates at record lows and encourage borrowing and spending have helped bolster the economy.

Bernanke stopped short of committing the Fed to any specific move, such as another round of bond purchases to lower long-term rates. But in a speech at an annual Fed conference in Wyoming Bernanke said that even with rates at super-lows, the Fed can do more.

He noted that further action carries risks but says the Fed can manage them. The Fed �should not rule out� new policies to improve the job market, Bernanke says.

At the end of every August, economists and central bankers convene against this spectacular Wyoming at the symposium organized by the Federal Reserve Bank of Kansas City. They present papers and argue about economic issues. But mostly, they wait to see what the Fed chairman has to say.

The most dramatic step the Fed could take would be another round of bond buying. This is known as quantitative easing, or QE. In two rounds of QE, the Fed bought more than $2 trillion of Treasury bonds and mortgage-backed securities. Many investors have been hoping for a third round � QE3� to be unveiled as soon as the Fed�s next policy meeting in September.

In light of Bernanke�s comments Friday, some analysts said that might be a stronger possibility now.

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