Bernanke Indicates Fed May Soon Act to Stimulate Economy

On Friday morning, Federal Reserve Chairman Ben Bernanke indicated that the Fed will likely take further action to stimulate the economy.

In the past few months, the economy has seen some improvement. The stock market has been adding peaks to its record of lows and home prices have risen. Unemployment has been holding steady, but the August numbers--to be announced later this week--will be considered a key indicator of economic health or lack thereof.

But this slight improvement isn't enough to rehabilitate our struggling economy.

altIn Jackson Hole, WY, Bernanke said that, "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." (The full text of his speech is available here.)

The Fed, which appears in headlines that also prominently feature terms such as "economic stimulus" and "quantitative easing," is a government board, the role of which is articulated by The Huffington Post:

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"The Fed has a dual mandate, to ensure full employment and stable prices, and it is clearly failing on at least that first half of the mandate. Despite this failure, the Fed has for months refrained from taking any more big steps to help the economy."

While these remarks could be his musings on the current economy, they're being taken by many as an indication that the Fed might, after its months of abstinence, again take action to stimulate the economy.

The board will hold its next policy meeting on Sept 12-13, which will be its chance to implement any further measures.

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