Bernanke: Fed Would Supply More Stimulus If Needed

By MARTIN CRUTSINGER | July 13, 2011 | 10:14 AM EDT

WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke says the central bank is prepared to provide additional stimulus if the current economic lull persists.

Delivering his twice-a-year economic report to Congress, Bernanke laid out three options the central bank would consider. He says the Fed could launch another round of Treasury bond buying, the third such effort since 2009. It could cut the interest paid to banks on the reserves they hold as a way to encourage them to lend more.

The Fed could also be more explicit in spelling out just how long it planned to keep rates at record-low levels. That would give investors confidence about the Fed's efforts to continue supporting the economy.

Bernanke maintains temporary factors have slowed the economy and they should fade in the second half of the year.