Bernanke affirms commitment to growth without specifying FOMC plans

“The Federal Reserve will do all it can to help restore high rates of growth and employment in a context of price stability,” Bernanke told the Economic Club of Minnesota.

In what could be taken as a bid to quell concerns among some of his colleagues that further easing could spark inflation, Bernanke said a rise in consumer prices this year would likely to be transitory.

“We see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy,” he said.

U.S. stocks fell as investors registered disappointment that Bernanke did not lay out a plan of action for the central bank's policy-setting Federal Open Market Committee (FOMC). The U.S. dollar extended gains against the euro, while U.S. Treasury debt prices rose.

“Although the speech was lacking in any specifics about potential policy options, we see the relatively downbeat nature of the chairman's comments on the growth outlook as confirming our view that the FOMC is inclined to take further accommodative steps at its September meeting,” said Michael Gapen, an economist at Barclays Capital in New York.

A widening debt crisis in Europe and collapse in consumer and business confidence in the United States has raised concern the U.S. and global economies could slide back into recession.

So stark is the recent deterioration in the global economic recovery that the political debate in Washington has veered in only six weeks from a preoccupation with how to cut U.S. debt to a renewed urgency on lowering unemployment.

Central banks around the world, for their part, have put inflation-fighting campaigns on hold in response to the worsening economic outlook. The European Central Bank (ECB) held steady after a series of rate hikes on Thursday, and the Bank of Canada on Wednesday likewise opted not to withdraw any more monetary stimulus.

South Korea, Indonesia, Malaysia and the Philippines also paused in fights against inflation while they assessed how much a slowdown in U.S. and European growth will hurt their economies.

U.S. President Barack Obama is scheduled to lay out a jobs package worth more than US$300 billion later on Thursday, and job creation was a key theme for Republican presidential hopefuls at a debate on Wednesday.

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