Bernanke Signals More Easing Likely if Job Growth Wanes
21 June 2012
, by Caroline Salas Gage and Joshua Zumbrun (Bloomberg)http://www.bloomberg.com/news/2012-06-21/bernanke-signals-more-easing-likely-if-job-growth-wanes.htmlExcerpt:Chairman Ben S. Bernanke is signaling the Federal Reserve will probably add to its record stimulus should the economy fail to make sufficient progress in creating jobs for 12.7 million unemployed Americans
The policy-setting Federal Open Market Committee yesterday extended its Operation Twist program and will swap $267 billion
in short-term securities with longer-term debt through the end of 2012.
Fed officials also downgraded their forecasts for growth and employment while noting “significant downside risks” to the economy.
Bernanke, speaking at a Washington press conference, said policy makers are focusing “primarily” on the outlook for jobs in deciding whether to ease further, and more action would be needed without “sustained improvement in the labor market.”
Payrolls grew at the slowest pace in a year in May, and the jobless rate has been stuck above 8% since February 2009.
“If job growth doesn’t pick up from the recent soft readings in the next few months, then the Fed would likely do more and do a full scale asset-purchase program,” said Dean Maki, chief U.S. economist at Barclays Plc in New York and a former Fed economist.
“They’re prepared to take further action
U.S. stocks slipped after the Fed cut its estimates for growth and Bernanke said progress in the labor market has slowed.