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Fed boss silent on new steps

Jackson Hole, Wyoming, Aug. 26 (Reuters): US Federal Reserve chairman Ben Bernanke today stopped short of signaling further action to boost the US recovery, but said it was critical for the economy’s health to reduce unemployment.

Bernanke said the central bank had marked down its outlook for US economic growth and made clear the policy focus was still on spurring a stronger recovery, but he did not provide any fresh details on steps the Fed could take.

“It is clear the recovery from the crisis has been much less robust than we had hoped,” he said.

“The growth fundamentals of the US do not appear to have been permanently altered by the shocks of the past four years,” Bernanke said. “The economic healing will take a while, and there may be setbacks along the way,” he added. “However, the healing process should not leave major scars.”

While expressing long-term optimism, Bernanke made plain the central bank found recent developments troubling, and said the Fed would expand its September policy meeting to two days from one to discuss its options.

Shortly after Bernanke started to deliver his speech at Jackson Hole, a half-hour after the Wall Street opening bell, investors generally got what they had been bracing for. The Standard & Poor’s 500-stock index promptly slipped 2 per cent. The Dow Jones industrial average lost 1.8 per cent, and the Nasdaq composite index slipped 1.3 per cent.

But within a half-hour, there was some recovery, and by mid-morning the S&P was up 0.4 per cent, the Dow was up 0.2 per cent and the Nasdaq rose 1.3 per cent.

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