US Federal Reserve Chairman Ben Bernanke today said the US may face yet more slow jobs growth, as he warned short-term budget cuts and financial turmoil could further threaten the economy.
In an address to Congress, Bernanke said recent indicators "point to the likelihood of more sluggish job growth in the period ahead," as he urged lawmakers to do what they can to boost the recovery amid the ongoing crisis in Europe.
The Fed chief told US lawmakers that a credible plan to cut long-term deficits was needed urgently, but one that should "avoid fiscal actions that could impede the ongoing economic recovery."
Bernanke called on lawmakers to do their part. "Monetary policy can be a powerful tool, but it is not a panacea," he said, urging sensible budget policy decisions that "avoid fiscal actions that could impede the ongoing economic recovery."
With many clamouring for immediate and severe budget cuts of the like seen in Europe, Bernanke warned that could hit a recovery that "has been much less robust than we had hoped."
"There is evident need to improve the process for making long-term budget decisions, to create greater predictability and clarity, while avoiding disruptions to the financial markets and the economy," he said.
However he made clear that the US Federal Reserve is prepared to take further steps to help an economic recovery that is "close to faltering".
"The (Fed's policy-setting Open Market) Committee will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in the context of price stability," Mr Bernanke told the Joint Economic Committee of Congress.
His comments also come amid heightened concern that Europe's debt crisis could spill over to the continent's banks and beyond.
"It is difficult to judge how much these financial strains have affected US economic activity thus far, but there seems little doubt that they have hurt household and business confidence, and that they pose ongoing risks to growth," Bernanke said.
