U.S. Federal Reserve Chairman Ben Bernanke said Thursday his institution is ready to act if the European financial crisis worsens.
"As always, the Federal Reserve remains prepared to take action as needed to protect the U.S. financial system and economy in the event that financial stresses escalate," he told Congress' Joint Economic Committee.
Bernanke acknowledged that the crisis in Europe has acted as a drag on the U.S. economy, saying European authorities must take additional measures "to stabilize euro-area banks, calm market fears about sovereign finances, achieve a workable fiscal framework for the euro area, and lay the foundations for long-term economic growth."
The Fed chairman said "U.S. banks have greatly improved their financial strength in recent years" but he warned that "the situation in Europe poses significant risks to the U.S. financial system and economy and must be monitored closely."
Moreover, he did not rule out further stimulus measures by the Fed in the wake of a recent disappointing U.S. jobs report and others signs of weakening economic conditions.
"With unemployment still quite high and the outlook for inflation subdued, and in the presence of significant downside risks to the outlook posed by strains in global financial markets, the FOMC (Federal Open Market Committee) has continued to maintain a highly accommodative stance of monetary policy," Bernanke said.
He said the Federal Reserve's policy-making committee must evaluate whether current economic expansion is sufficient to further bolster job creation and, if not, weigh all remaining options for spurring growth.
No further stimulus moves are expected at the Fed's next meeting on June 19-20
U.S. employers created just 69,000 jobs in May, well below analysts' expectations, and the unemployment rate ticked up to 8.2 percent from 8.1 percent in the previous month, the Labor Department said last Friday.
The rate of job creation in May was the lowest in the past 11 months, with the majority of analysts expecting more than 150,000 jobs to be created last month.
The total number of unemployed remained at 12.7 million.
The long-term unemployed, defined as those who have been looking for work for more than 27 weeks, rose from 5.1 million in April to 5.4 million in May, accounting for 42.58 percent of all unemployed workers. EFE