The head of the US central bank, Ben Bernanke,
is not ruling out further monetary measures to spur the under
performing US economy, according to the text of a speech he is due to
deliver later Friday.
Referring to growth that has been "tepid" in recent quarters and
an economic situation that is "far from satisfactory," Bernanke
repeated his statement that the central bank would "provide
additional policy accommodation as needed" to spur growth.
Bernanke was to speak Friday to central bankers and economists at
an annual forum in Jackson Hole, Wyoming, two weeks ahead of the next
meeting of the Federal Open Market Committee.
Additional policy accommodation means large scale purchases of
assets, a tactic the Federal Reserve has tried twice with no
appreciable reduction in the jobless rate.
In the text of his speech, Bernanke said it would be done "as
needed to promote a stronger economic recovery and sustained
improvement in labor market conditions in a context of price
stability."
The US unemployment rate, which fell in July to 8.3 per cent, was
still more than 2 percentage points above what most members of the
market committee consider normal, he said, expressing dismay that
other indicators, such as the number of people forced into part-time
jobs, confirm that labour force utilization remains very low.
Unless the economy begins to grow more quickly, the unemployment
rate is likely to remain far above a maximum employment level for
some time, Bernanke writes.
"I have noted on other occasions that the declines in unemployment
we have seen would likely continue only if economic growth picked up
to a rate above its longer-term trend," the text says. "In fact,
growth in recent quarters has been tepid, and so, not surprisingly,
we have seen no net improvement in the unemployment rate since
January."
The text refers to this as a stagnation in the labour market and
said it was a "grave concern" because it caused suffering, wasted
human talent and could cause lasting structural damage to the
economy.
Bernanke said some economists have interpreted the lack of
progress despite central bank policy actions as evidence that the
financial crisis already has caused structural damage to the economy,
rendering the current levels of unemployment "impervious to
additional monetary accommodation."
However, he concludes more positively that following every
previous US recession since World War Two, the unemployment rate has
returned to a level close to its pre-recession level.
