Federal Reserve Chairman Ben S. Bernanke said progress in reducing unemployment is likely to be “frustratingly slow” and repeated the Fed is ready to take further action to boost the recovery, while refraining from discussing specific steps.
“The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year,” Bernanke said today in testimony for delivery to the Senate Banking Committee in Washington. The Fed is “prepared to take further action as appropriate to promote a stronger economic recovery,” he said.
The so-called fiscal cliff would push the economy into a “shallow recession” early next year, Bernanke said, citing an estimate from the Congressional Budget Office. “Additional negative effects” would result from public uncertainty about spending plans, including the debt ceiling, he told lawmakers.
The aide, who spoke on condition of anonymity, said Schumer “plans to note that election-year politics have prevented Congress from enacting the kind of fiscal relief that the Fed chairman has subtly suggested is necessary.”
At their last meeting, several Fed policy makers said the central bank should consider developing “new tools” to help support a stronger economic recovery, without specifying what those tools might be.