US Federal Reserve chairman Ben Bernanke has offered no new economic stimulus measures from the central bank in a speech much-awaited by nervous markets today.
There had been speculation that Mr Bernanke might announce a third round of quantitative easing.
Instead, Mr Bernanke said the US government needed to act to boost jobs, saying policies to strengthen growth were mostly 'outside the province of the central bank'.
Speaking at a gathering of central bankers, including ECB chief Jean-Claude Trichet, in Jackson Hole in Wyoming, he said that US second-half growth should improve. He said that shocks in recent years had not permanently altered the country's potential.
He said that while record-low interest rates will promote growth over time, the weak US economy requires further help in the short run.
But he warned that a repeat of this year's political battle over the debt and deficit could 'seriously jeopardise' the recovery.
Mr Bernanke did say that the Fed still has a range of monetary tools that could help the economy, which it will review in a policy board meeting on 20-21 September.
The Fed 'is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability,' he said.
Mr Bernanke said that volatility and risk aversion in markets had re-emerged in reaction to concerns about both European sovereign debts and developments related to the US fiscal situation.
'I have confidence that our European colleagues fully appreciate what is at stake in the difficult issues they are now confronting and that, over time, they will take all necessary and appropriate steps to address those issues effectively and comprehensively,' he said.
Mr Bernanke's speech met with a mixed reception in financial markets, where some had hoped he would make a clear case for a further easing of monetary policy.
Stocks initially fell, with the blue chip Dow Jones industrial average dropping as much as 220 points, but later turned higher.
