The remarks—the strongest signal yet that the Fed is ready to bolster growth—cheered investors, who bid up U.S. stocks.
Speaking Friday to world monetary policymakers gathered in Wyoming, he said "policy options are available to provide additional stimulus" to the U.S. economy, should it be necessary.
The latest sign of trouble for the economy came Friday as the Commerce Department revised down its estimate for second-quarter growth in gross domestic product. The economy grew only 1.6% in the period, not the 2.4% annual rate previously estimated.
Stumbling GDP growth adds to the gloom already created by plunging home sales and other signs that consumers are shying away from spending. Technology bellwether Intel Corp. warned Friday its third-quarter revenue could fall short of estimates because of weak
All of this drives home a grim political reality for the Obama administration and for Democrats facing elections this fall: What many had hoped would be a "summer of recovery" is ending on a dismal note.
"The pace of recovery in output and employment has slowed somewhat in recent months," Mr. Bernanke said in his speech in Wyoming, an annual event hosted by the Kansas City Fed. He made the case that growth will pick up in 2011, spurred in part by consumers who have shored up their damaged finances. However, he also made clear the Fed would respond if that forecast is wrong and growth continues to falter, and expressed confidence that its efforts would work.
Mr. Bernanke sketched out four options the Fed could deploy to boost the economy. At the top of the list is the resumption of a program of long-term securities purchases by the Fed, which could help to drive already-low long-term interest rates down even more. The Fed can't use its traditional lever of pushing short-term interest rates down because it has already pushed them to near zero.