Federal Reserve Chairman Ben Bernanke said on Thursday the U.S. central bank was ready to shield the economy if financial troubles mount but offered few hints that further monetary stimulus was imminent.
He told Congress the Fed was closely monitoring "significant risks" to the U.S. recovery from Europe's debt crisis but struck a decidedly different tone from the central bank's No. 2 official, who argued in favor of monetary support on Wednesday.
For investors hungry for clues about the prospect for a third round of large-scale Fed bond buying, Bernanke's testimony disappointed.
"The Federal Reserve remains prepared to take action as needed to protect the U.S. economy in the event that financial stresses escalate," Bernanke told the congressional Joint Economic Committee.
Stocks pared gains on Bernanke's remarks but remained positive after a steep rally on Wednesday, while the dollar strengthened against the euro.
"It doesn't really settle the debate," said Vassili Serebriakov, senior currency strategist at Wells Fargo. "There was some hope for more concrete signs, a clearer hint, that further easing is forthcoming, and I don't think we got that today.
Slowing U.S. job creation, evident in surprisingly weak employment data last Friday, and an escalation in the euro zone's crisis had raised expectations of Fed action, perhaps as early as the central bank's next policy meeting on June 19-20.
Read more: http://www.reuters.com/article/2012/06/08/us-usa-fed-idUSBRE85413N20120608
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