Bernanke: Federal Reserve prepared to take action

Chairman Ben Bernanke said on Thursday that the Federal Reserve was poised to take action if the US economy weakened once more, but did not signal any imminent steps to be taken, according to the Associated Press.

Bernanke said the European debt crisis posed a significant risk to the US financial markets and also noted that unemployment remained high.

"As always, the Federal Reserve remains prepared to take action as needed to protect the US financial system and economy in the event that financial stresses escalate," he told the Joint Economic Committee congressional panel.

Bernanke also said the slowdown in hiring during the past two months might indicate, "that more-rapid gains in economic activity will be required to achieve significant further improvement in labor market conditions," according to The Washington Post.

He said he and his colleagues were still debating whether economic growth was sufficient to spur progress in the labor market.

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Bernanke warned that the massive number of tax increases and spending cuts that will automatically take effect in 2013 could be a "fiscal cliff." He told Congress, "What is particularly striking here is that this is all pre-programmed. If you all go on vacation, this is still going to happen," according to The Hill.

According to Reuters, the slowing in job creation in the US and the escalation of the eurozone's debt crisis had raised expectations that the Fed would take action.

Bernanke said, "Economic growth appears poised to continue at a moderate pace over coming quarters," according to Reuters. "Despite economic difficulties in Europe, the demand for US exports has held up well."

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Bernanke's stance seemed markedly different from that of Janet Yellen, vice chairman of the Fed, Dennis Lockhard, the head of the Atlanta regional Fed Bank and John Williams, the president of the San Francisco Fed bank, all of whom said Wednesday that the Fed may need to take action to help the economy, according to Bloomberg.

Rep. Kevin Brady, a Republican from Texas who is the vice chairman of the committee, said, "It is my belief that the Fed has done all that it can do and has perhaps done too much," according to Bloomberg.

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