Bernanke may nod to weaker outlook, omit details

Bernanke will also likely touch on fears of waning economic momentum as evidenced by a parade of gloomy indicators, suggesting the U.S. economy has slowed to a crawl when he speaks at the Fed's annual retreat in the Teton mountains.

He may also note the Fed's decision earlier this month to renew purchases of assets to replace ones that have rolled off the Fed's balance sheet.

But he seems unlikely to offer any detailed plan of what the U.S. central bank will do going forward or to define what would trigger more aggressive steps by the Fed.

I expect Bernanke to frame the current environment and frame the foundations for where the Fed sees things ... without announcing any new policy, said Mickey Levy, chief economist for the Bank of America.

This is not the type of forum to announce a new policy, Levy said in an interview with Reuters Insider television.

The conference, organized by the Kansas City Federal Reserve Bank, draws prominent economists and central bank officials from around the world to socialize and discuss academic papers for three days in a secluded national park that affords few distractions other than outdoor activities such as hiking or horseback riding.

The theme this year is macroeconomic challenges in the decade ahead, and while Bernanke may take the long view, most of his listeners will hang on his every word for clues about how he plans to deal with challenges in the next ten weeks.

Focus on the Fed chairman's speech will be particularly keen because he will speak shortly after the release of second quarter GDP data, which many think will be revised down drastically from 2.4 percent, and with some forecasting it will be below 1 percent.

Observers will parse his words for details that might hint at how close he is to another push to buy assets to lower longer term interest rates further. One telling item could be any reference to difficulties that slow or below trend growth pose to fulfilling the full employment side of the Fed's dual mandate.

Should Bernanke make a nod towards this sentiment that high levels of unemployment are incompatible with the dual mandate, we would take that as a strong signal of further balance sheet expansion, Michael Feroli, an economist for JPMorgan in New York wrote in a note to clients.

Were Bernanke merely to repeat the Fed's oft-stated vow to use any such policy tools as necessary to meet its objectives would instead be seen as a more neutral stance, Feroli said.

(Reporting by Mark Felsenthal; Editing by Bernard Orr)