Bernanke Says Federal Reserve Ready to Further Stimulate the Economy

From LATimes.com:

Federal Reserve Chairman Ben S. Bernanke on Friday laid out a case for the central bank to take further action to bolster growth, citing the risks of prolonged high unemployment and a U.S. economy slipping into a deflationary spiral.

In a much-anticipated speech in Boston, Bernanke did not spell out details of how and when the Fed would take action. But the first option that he mentioned was a program of buying additional assets, namely government bonds, in an effort to drive down long-term interest rates and stimulate economic growth.

The central bank is widely expected to announce such a program, known as quantitative easing, at the conclusion of its next policymakers' meeting on Nov. 2 and 3.

"There would appear to be a case for further action," he said at a conference sponsored by the Federal Reserve Bank of Boston.

As Bernanke spoke, the government released statistics showing the so-called core inflation rate, which excludes volatile energy and food prices, was unchanged in September and is now running at an annual rate of 0.8% — well below the Fed's informal desired target of 1.5% to 2%. Separately, there was better-than-expected news on last month's retail sales activity as total sales rose 0.6% from the prior month, boosted by higher auto sales.

Fed Considering Whether More Steps Needed to Fix Economy

From USAToday.com:

Federal Reserve policymakers are wrestling with what additional steps — if any — should be taken to strengthen the plodding economy and drive down near double-digit unemployment.

Lots of debate is expected at today's one-day meeting. But few expect any major programs to be unveiled. Instead, many will be looking to see if the Fed offers clues about the timing of any new aid and what changes in the economy would trigger such a move. A statement from the Fed is expected about 2:15 p.m. ET.

To give the Fed extra time for discussions, the meeting is scheduled to start around 8 a.m. — earlier than when it has two-day sessions.

There are differing views on the Fed's main policymaking group — the Federal Open Markets Committee — about what should be done. And some pressure is off after a few mildly positive economic reports showed the pace of layoffs has slowed, shoppers' appetites to spend has picked up and factory production is growing.

The reports have helped to ease concerns about the economy slipping back into a new recession, giving Fed Chairman Ben Bernanke and his colleagues a little breathing room.