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Federal Reserve Chairman Ben Bernanke offered no new hints Tuesday that the central bank is planning more easing, but he repeated his pledge that the Fed “is prepared to take further action as appropriate to promote a stronger economic recovery.”
In prepared testimony before the Senate Banking Committee, Bernanke said economic uncertainty is increasing, mainly due to the European debt crisis and the looming “Fiscal Cliff” in the U.S.
“Risks to economic growth have increased,” he said, and “Europe’s financial markets and economy remain under significant stress.”
“Reduction in unemployment is likely to be frustratingly slow,” Bernanke said, but he said there were “modest signs of improvement in housing.”
Stocks quickly dropped after Bernanke's initial remarks, but turned slightly higher when he responded to the committee's questions about how to improve unemployment levels. "The Fed stands ready to do more asset purchases when needed," he said. "Any actions would likely involve the [Fed's] balance sheet." After these remarks, the Dow Jones Industrial Average , the S&P 500 , and the Nasdaq edged higher in choppy trading.
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