US Federal Reserve chairman Ben Bernanke has acknowledged that the country's economy has slowed, but he offered no hint that the US central bank was considering any more measures to accelerate growth.
He also warned members of Congress who might be planning aggressive budget cuts that they had the potential to derail the recovery if cuts in government spending take hold too soon.
A recent spate of weak economic data, capped by Friday's report showing weak job creation last month, had renewed speculation the Fed might again come to the economy's aid.
Bernanke gave no such indication but did say the recovery was fragile enough to warrant keeping in place the extraordinary monetary support the Fed has already provided.
Speaking to a banking conference last night, the Fed chairman said that while he expected the economy to strengthen in the second half of the year, the job market needed to be watched closely.
'The economy is still producing at levels well below its potential,' he said. 'Consequently, accommodative monetary policies are still needed.'
Bernanke repeated his view that a spike in U.S. inflation should prove fleeting as commodity prices moderate. In addition, weak wage growth and stable inflation expectations should help keep prices down, he said.
On the budget, Bernanke repeated his call for a long-term plan for a sustainable fiscal path but warned politicians against massive short-term cuts in spending. 'A sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery,' he said.
The Fed has already slashed overnight interest rates to near zero and purchased more than $2 trillion in government bonds to pull the economy from a deep recession and spur a recovery.
With the central bank's balance sheet already bloated, officials have suggested there would be a high bar for any further Fed easing. The Fed's current $600 billion round of government bond buying, known as QE2, is due to end this month.
