The much anticipated speech by Federal reserve Chairman Ben Bernanke in Jackson Hole, WY today has come with very little fanfare from Bernanke. It’s what he didn’t say in his speech that have some investors scratching their heads. Bernanke proposed no new steps to boost the economy, but he did hint that Congress will need to act quickly to stimulate growth and address the unemployment picture in this country. Bernanke said that while record low interest rates will continue to promote growth over time, the weak U.S. economy does require some help over the short run via Congress.
The Federal Reserve Chairman’s speech follows the news that the economy grew at an annual rate of just 1% this spring with a. 0.7% rate for the first six months of this year. It is expected there will be a slight expansion in the second half of this year. Bernanke states he is optomistic the job market and the economy will return to full health in the long run.
The following is an excerpt from Bernanke’s speech in Jackson Hole this morning: “ This economic healing will take a while, and there may be setbacks along the way. Moreover, we will need to remain alert to risks to the recovery, including financial risks. However, with one possible exception on which I will elaborate in a moment, the healing process should not leave major scars. Notwithstanding the trauma of the crisis and the recession, the U.S. economy remains the largest in the world, with a highly diverse mix of industries and a degree of international competitiveness that, if anything, has improved in recent years. Our economy retains its traditional advantages of a strong market orientation, a robust entrepreneurial culture, and flexible capital and labor markets. And our country remains a technological leader, with many of the world’s leading research universities and the highest spending on research and development of any nation.”
“The Fed has a range of tools that could be used to provide additional monetary stimulus,” Bernanke said.
Bernanke announced that the Fed has decided to expand its September meeting to two days on September 20-21. At this time, they will discuss and further review the pros and cons of further easing.