Federal Reserve Chairman Ben Bernanke on Thursday said the central bank would spare no effort to boost disappointingly weak growth and lower unemployment but offered no details of steps monetary policymakers might take.
The Federal Reserve will do all it can to help restore high rates of growth and employment in a context of price stability, Bernanke said in comments prepared for delivery to the Economic Club of Minnesota.
In what could be taken as a bid to quell concerns among some of his colleagues that further monetary easing could spark inflation, the Fed chairman said a rise in prices this year is likely to be transitory.
We see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy, he said.
Other than offering a bit more detail on the outlook for inflation and emphasizing that sluggish growth is not enough to satisfy the Fed, Bernanke offered few fresh insights into thinking at the central bank on measures to aid the recovery.
He largely reiterated remarks he made two weeks ago, repeating that the Fed has a range of tools to provide additional stimulus and is prepared to use them.
Unusually weak household spending and persistent financial strains spurred by worry over Europe's sovereign debt crisis and the loss of Washington's top-tier credit rating continue to hold back the recovery, Bernanke said.
The Fed chairman warned that overzealous belt-tightening by the U.S. government in the near term could also slow down the erratic recovery.
Substantial fiscal consolidation in the shorter term could add to the headwinds facing economic growth and hiring, he said.
(Reporting by Mark Felsenthal and Pedro Nicolaci da Costa; Editing by James Dalgleish)