(AP) - The Federal Reserve can do more if needed. But it wants to see how the economy fares over the next few months. And it would welcome help in boosting the economy from Congress and the White House.
That was the message, among others, that Chairman Ben Bernanke sent in a news conference Wednesday. Some highlights:
_ FED IS PREPARED TO ACT: Bernanke said the Fed is willing to do more to boost the economy if hiring doesn't pick up: "We'll continue to monitor the economy and see how things evolve. ... If we don't see continued improvement in the labor market, we're prepared to take additional steps." Those steps could include "additional asset purchases," which likely would mean more purchases of Treasury bonds. That could lower interest rates and encourage more borrowing and spending.
_ A FUZZY ECONOMIC PICTURE: Bernanke said recent economic reports haven't been good but added that they weren't clear: "The incoming data were somewhat disappointing, but it's not entirely clear how to read them. We had issues with weather and seasonal adjustment and other factors. ... We have to get, I think, further information about the state of the economy, about where things are going, about what's happening in Europe."
_ FED WAS `TOO OPTIMISTIC': Bernanke acknowledged that the Fed has previously had to adjust its policies after the economy performed worse than hoped: "Like many other forecasters, the Federal Reserve was too optimistic early in the recovery about the pace of recovery."
_ THE `FISCAL CLIFF': Bernanke warned that the impending expiration of tax cuts early next year and imposition of big spending cuts, known as the "fiscal cliff," is already creating uncertainty that could slow hiring: "Putting all these things together, you have a very substantial withdrawal of income from the economy that will affect spending and will affect the ability of the economy to recover."
_ MORE HELP, PLEASE: The Fed chairman also called on other parts of the government for help with the economy: "Monetary policy by itself is not going to solve our economic problems. We welcome help and support from any other part of the government. ... So collaboration would be great."
_ HOW THE FED HELPS THE ECONOMY: In addition to keeping interest rates low, Bernanke said the Fed's policies encourage investors to sell Treasury bonds, which pay little interest, and buy other assets, such as corporate bonds: "The effect will be to lower corporate bond rates." And if companies can borrow at lower rates, "then they're more likely to expand, to add ... products, and consequently, they're more likely to hire."
_ HOW THE FED HELPS THE PUBLIC: "Many Americans are able to take advantage of lower interest rates. Many people have refinanced or bought homes. Others have taken out loans to buy cars. Auto loans are cheap and broadly available."
_ WHY THE RECOVERY IS WEAK: Bernanke cited three factors holding back growth: Europe's financial crisis, which is reducing U.S. exports and overseas sales by U.S. companies; the persistent weakness in the housing market; and spending cuts and layoffs by state and local governments. "Put them all together, and you have an economy which is growing less quickly than it normally would following a recession of the magnitude that we saw."
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