Federal Reserve Chairman Ben Bernanke has indicated more quantitative easing measures will be pumped into the US economy when it is needed to avert long-term damage, but his lacklustre speech failed to impress those seeking a firmer commitment.
In an eagerly awaited Jackson Hole speech Bernanke said policies to bring down US unemployment numbers have not had the desired effect, with the Federal Reserve ready step in with additional policy action.
"Over the past five years, the Federal Reserve has acted to support economic growth and foster job creation, and it is important to achieve further progress, particularly in the labor market," said Bernanke.
"Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."
However, his statement failed to provide a more solid commitment to QE3.
Delivering a downbeat address, he added even with alternative policy action the US must not lose sight of the daunting economic challenges it faces.
"The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years."
Equity markets were initially underwhelmed by the speech, with the FTSE 100 reversing a 0.4% gain to briefly turn negative on the day, while the dollar rose against the euro as investors rushed into safe havens.
However, losses were then reversed as investors reflected on Bernanke's comments, the euro hitting a session high of $1.263 and London's blue chip index once again standing 0.4% higher at 5,738.
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