By Steven K. Beckner

JACKSON HOLE, Wyo. (MNI) – Federal Reserve Chairman Ben Bernanke
broke little new ground in an anxiously awaited speech Friday

Bernanke, in opening remarks at the Kansas City Federal Reserve
Bank’s annual symposium, said the Fed’s policymaking Federal Open Market
Committee will continue consideration of the various monetary policy
options he has previously outlined and reiterated that the Fed is
“prepared to employ its tools as appropriate.”

And while emphasizing the Fed’s need to promote “low and stable”
inflation “over time,” he also stressed the need to bring down high
unemployment and shorten the duration of joblessness. Short-term
policies to do so will also help the economy’s long-term prospects, he
said.

In a more explicit explication of the lengthened “forward guidance”
which the FOMC adopted at its Aug. 9 meeting, Bernanke made clear that
“the most likely scenarios” call for holding the federal funds rate in
the zero to 25 basis point range “for at least two more years.”

However, unlike his speech here last August, when he signalled a
resumption of quantitative easing, nothing Bernanke said could be
construed as heralding the impending launch of some new monetary
stimulus scheme.

In fact, Bernanke made a point of talking about the limits of
monetary policy — something which a number of his FOMC colleagues
have also stressed.

Many of the policies needed to promote economic growth lie “outside
the province of the central bank,” he said, adding that “effective tax,
trade and regulatory policies.”

Unless fiscal policy is put on a “sustainable path,” he warned
that the federal government will “spiral out of control.”

As he has before, the Fed chief urged a “credible” long-term plan
to reduce deficit spending and curb growth of the national debt, but
in a new twist he also caled for “a better process for making
fiscal decisions,” noting that the recent ugly squabble over
raising the debt ceiling and ensuing downgrade of U.S. government
debt had contributed to weakening consumer and business confidence.

-more-

** Market News International **

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