Although Federal Reserve Chairman Ben Bernanke will tell the Senate today that the Fed is ready to take further action to boost the economy, he stopped short of saying the central bank will unleash a new round of quantitative easing.
Bernanke will deliver the Fed’s semiannual report to Congress beginning today in the Senate, and continuing Wednesday before the House.
“Economic activity appears to have decelerated somewhat during the first half of this year,” Bernanke said in prepared statements released in advance of the hearing.
The average increase in payroll employment shrank to 75,000 per month during the second quarter, after averaging nearly 200,000 per month during fourth quarter 2011 and first quarter 2012.
Household spending, while increasing, took a slower rate of growth during the second quarter, according to Bernanke’s prepared testimony.
“At the time of the June meeting of the Federal Open Market Committee, my colleagues and I projected that, under the assumption of appropriate monetary policy, economic growth will likely continue at a moderate pace over coming quarters and then pick up very gradually,” Bernanke said.
The Fed’s GDP growth projections have been revised downward since the last congressional report in January, to between 1.9% and 2.4% for 2012, and between 2.2% to 2.8% for 2013.
Participants at that June meeting reported a higher degree of uncertainty about their forecasts than normal due to two main sources of risk: Europe and the U.S. deficit, which Bernanke said is “on an unsustainable path.”