Richard Drew, Associated Press
WASHINGTON — Federal Reserve Chairman Ben Bernanke left open the possibility Wednesday of further Fed action to stimulate the economy.
Speaking at a news conference, Bernanke walked a fine rhetorical line: He signaled that the Fed would act more aggressively to reduce unemployment if needed — but not at the cost of high inflation.
Bernanke spoke after Fed policymakers ended a two-day meeting by reiterating their plan to keep interest rates near zero through at least late 2014. The officials said the economy is growing moderately and that the pace will likely pick up.
But they also cautioned that unemployment won't fall sharply anytime soon and that risks from Europe's debt crisis remain.
In a statement, they noted that inflation has risen, mainly because of higher gasoline prices, but said they expect the spike to be temporary.
Since the financial crisis struck, the Fed has pursued two rounds of purchases of Treasury bonds and mortgage-backed securities to try to push down long-term interest rates. The goal has been to encourage borrowing and spending.
Bernanke told reporters that more bond purchases, or other steps by the Fed, are still an option if the economy weakens.
"Those tools remain very much on the table," Bernanke said.
Its decision to leave its policy unchanged had been widely expected, and reaction in financial markets was muted. The yield on the 10-year Treasury note edged higher, and the dollar rose slightly against other currencies. Stock indexes didn't move much.
David Jones, chief economist at DMJ Advisors, said he thinks the Fed will keep another round of bond buying as an option through the rest of this year. But with the economy slowly improving, Jones said, the Fed is unlikely to implement such a program this year.
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