Bernanke Says Fed Will Jump Start the Economy; Growth in 2nd Quarter is Weaker at 1.6%

Federal Reserve Chairman Ben Bernanke said on Friday, the Fed will help jump-start the economy. Bernanke address the Kansas City Federal Reserve annual meeting in Jackson Hole,WY.

The talk comes as the Commerce Department releases a revised 2nd quarter growth down from 2.4% to a measly 1.6% GDP.

“The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do,” Mr Bernanke said in a speech at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming.

The only issue, he said, is whether “the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool”. Mr Bernanke said that the Fed was ready to act “especially if the outlook were to deteriorate significantly”.

Bernanke did not give a time-table or an event when he would intervene.

Richard Volpe, co-head of interest rates at RBS Securities, said: “The chairman has raised the bar for the market, as we can expect more QE only if the economy deteriorates significantly.”

Financial Times has more.

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