Mike Leeper was Juror No. 5 in Timothy McVeigh's trial for the 1995 terror attack that killed 168 people.
BY: THE ASSOCIATED PRESS
WASHINGTON – Chairman Ben Bernanke said the Federal Reserve is prepared to take further steps to lift the U.S. economy if it weakens. But he didn’t signal any imminent action in testimony before a congressional panel Thursday.
Bernanke said the European debt crisis poses significant risks to the U.S. financial markets. And he noted that U.S. unemployment remains high and the outlook for inflation subdued.
“As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate,” Bernanke told the congressional Joint Economic Committee.
Most economists don’t expect further moves at the Fed’s next policy meeting June 19-20, despite some signals from other Fed members in recent days. They note that long-term rates have already touched record lows. Even if rates did decline further, analysts say they might have little effect on the economy.
John Ryding and Conrad DeQuadros, economists at RDQ Economics, said there was nothing in the testimony to “tip Bernanke’s hand” ahead of the June meeting of the Federal Open Markets Committee, the Fed’s policy committee.
“Yes, the Fed Chairman said the Fed stands ready to act if Europe poses a threat to the U.S. financial system or the economy. However, he gave no specifics and essentially repeated the language from the FOMC statement,” they wrote in a note to clients.
The Fed could buy more bonds to lower long-term interest rates, which would encourage more borrowing and spending. Or it could extend its plan to keep short-term rates near zero beyond late 2014.
But Bernanke may face pressure not to pursue further stimulus before the November election because such steps could be perceived as helping President Barack Obama win re-election.
Rep. Kevin Brady, R-Texas, warned against more bond buying at the hearing. He said it could raise the risks of inflation.
“It is my belief that the Fed has done all that it can do and has perhaps done too much,” Brady, the vice chairman of the committee, said.
On Wednesday, Janet Yellen, the vice chairman of the Fed, Dennis Lockhart, the head of the Atlanta regional Fed Bank, and John Williams, president of the San Francisco Fed bank, all expressed the view that the Fed may need to do more to provide support,
A bleaker view of the economy has taken hold in recent weeks, especially as hiring has weakened. U.S. employers added just 69,000 jobs in May, the fewest in a year. Since averaging a robust 252,000 a month from December through February, job growth has slowed to a lackluster 96,000 a month.
And the U.S. economy grew at a tepid annual rate of 1.9 percent in the first three months of 2012.
Fears are also growing that a collapse of Europe’s euro currency union could trigger a panic and perhaps cause a global recession.
The Fed’s policy committee has been split between those who favor doing everything possible to strengthen the economy and reduce unemployment and those more concerned about inflation risks.