Fed Chief: Good Case For 'Further Action' To Help Economy - Spokane, North Idaho News & Weather KHQ.com

Fed Chief: Good Case For 'Further Action' To Help Economy

MSNBC.COM - Federal Reserve Chairman Ben Bernanke said Friday that high unemployment and low inflation point to a need for a further easing of U.S. monetary policy, but said policymakers were still weighing how aggressive they should be. "There would appear — all else being equal — to be a case for further action," Bernanke said in a speech delivered to a conference sponsored by the Boston Federal Reserve Bank.

Bernanke said a prolonged period of high unemployment could pose a risk to the recovery's sustainability and said the low level of inflation meant the risk of a dangerous downward slide in prices was greater than desirable.

The economy is growing at a pace "less vigorous than we would like," Bernanke acknowledged.

Unemployment, now at 9.6 percent, has been stuck near double digits for more than a year. Bernanke indicated that the Fed is concerned that economic growth is likely to remain lackluster and that unemployment will decline only slowly next year. High unemployment is likely to keep consumers cautious in their spending.

Because the economy is weak, "the risk of deflation is higher than desirable," Bernanke said.

Bernanke also said the Fed must proceed cautiously in deciding how big a program to buy Treasury debt should be. He said it is a challenge for Fed policymakers to determine the size of the program and how the debt purchases would be paced.

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