Fed chief projects optimism

Offers no sign of action to boost growth

Slumping job growth has alarmed some economists who fear the U.S. economy is in trouble.

Ben S. Bernanke, the nation’s central banker, doesn’t appear to be one of them.

The Federal Reserve chief sketched a hopeful outlook in two hours of testimony to a congressional panel Thursday, giving no hint that the Fed will take further steps soon to aid the economy.

Mr. Bernanke acknowledged that Europe’s debt crisis poses risks to the U.S. financial markets. He also noted that unemployment remains high at 8.2 percent. And he said the Fed is prepared to take steps to boost the economy if it weakens.

But he said Fed officials, who meet again later this month, still need to study the most recent economic trends, including job growth. For now, Mr. Bernanke said he foresees moderate growth this year.

He said he’s mindful that all that could change if Europe’s crisis quickly worsens or U.S. job growth stalls.

“As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate,” he told the Joint Economic Committee.

The Fed could buy more bonds to try to further reduce long-term interest rates, which might encourage more borrowing and spending. Or it could extend its plan to keep short-term rates near zero beyond late 2014 until an even later date.

But most economists don’t expect a major announcement at the Fed’s next policy meeting June 19 to 20, despite signals this week from some other Fed members in favor of new action to boost the economy.

And Mr. Bernanke could face pressure not to pursue further stimulus before the November election because such steps could be perceived as helping President Obama win re-election.

“The Fed stimulative effects have really run their course,” Mr. Obama’s presumptive Republican opponent, Mitt Romney, argued in a television interview last week.

John Ryding and Conrad DeQuadros, economists at RDQ Economics, said there was nothing in the testimony to “tip Bernanke’s hand” before the June meeting of the Fed’s policy committee.

“Yes, the Fed chairman said the Fed stands ready to act if Europe poses a threat to the U.S. financial system or the economy,” they wrote in a note to clients. “However, he gave no specifics.”

The government said last week that the economy grew at a sluggish annual rate of 1.9 percent in the first three months of 2012.

Paul Edelstein, an economist at IHS Global Insight, said he thought Mr. Bernanke didn’t seem alarmed by the weak hiring data for May.

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