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Federal Reserve Chairman Ben Bernanke is keeping the door open to further monetary stimulus. In a widely anticipated speech today in Jackson Hole, Wyo., Bernanke made clear that he has heard the concerns of hawks who say that easier money could cause inflation or asset bubbles. But he said—according to the text of his 24-page speech released in Washington—that “the costs of nontraditional policies, when considered carefully, appear manageable.”
Bernanke isn’t promising more action by the rate-setting Federal Open Market Committee. He can’t, after all, because he has only one vote. The next meeting of the FOMC is Sept. 12-13. Its voters are likely to be heavily influenced by the August jobs report in deciding whether to take more extreme action. Bernanke has tried to bring along the committee as much as possible, to avoid dissent from its hawkish wing. But he said that “we should not rule out the further use of such policies if economic conditions warrant.”
True, there are risks to new measures such as another round of bond-buying. But Bernanke said that doing too little can be bad as well. Continued unemployment above 8 percent is a “grave concern,” he said. As reported by Bloomberg News’ Joshua Zumbrun and Craig Torres, Bernanke said long periods of high unemployment produce “enormous suffering and waste of human talent” and also risk causing “structural damage on our economy that could last for many years.”
The condemnation of high unemployment is Bernanke’s counterpoint to the hawks, like Richard Fisher, president of the Federal Reserve Bank of Dallas, which this week released a report warning of the dangers of “ultra easy money.” Bernanke is also acutely aware that his words will be closely parsed by politicians on both sides of the aisle. Mitt Romney, the Republican presidential candidate, has said he will not reappoint Bernanke, whose term expires in January 2014.