Fed chief offers no new stimulus

Chairman Ben Bernanke on Friday proposed no new steps by the Federal Reserve to boost the US economy whilehinting that Congress may need to act to stimulate hiring and growth.

Bernanke said on Friday that while record-low interest rateswill promote growth over time, the weak economy requires further help in theshort run. He spoke at an annual economic conference in Jackson Hole, Wyo.

His speech follows news that the economy grew at an annualrate of just 1 per cent this spring and 0.7 per cent for the first six monthsof the year. Only slightly healthier expansion is foreseen for the second half.

Bernanke said he's optimistic that the job market and theeconomy will return to full health in the long run.

Stocks fell lower after the speech was released. The Dow hadbeen down about 78 points, about 0.7 per cent, shortly before 10 a.m. The lossquickly extended to 180 points.

Bernanke's speech comes at a critical moment for theeconomy. Some economists worry that another recession might be near.

A big reason is that consumer spending has slowed. Homeprices are depressed. Workers' pay is barely rising. Household debt loadsremain high.

All that, compounded by Europe'sdebt crisis, has spooked the stock markets and unnerved consumers. Congress isfocused on shrinking deficits and seems unlikely to back any new spending totry to energize the economy.

That's why many have looked with anticipation to the Fed todo more. The central bank has already kept short-term interest rates near zerofor two and half years. And earlier this month, it said it would keep them there throughmid-2013.

--With AP inputs