No signals emerge; central bank chief takes shot at Congress By Greg Robb, MarketWatch JACKSON HOLE, Wyo. (MarketWatch) — Federal Reserve Chairman Ben Bernanke on Friday put off a lengthy discussion of the easing options available to the central bank until the next Federal Open Market Committee meeting late next month. “The Fed has a range of tools that could be used to provide additional monetary stimulus,” Bernanke said. These options were discussed in August and “we will continue to consider these and other pertinent issues...at our meeting in September,” Bernanke said. Bernanke announced that the Fed had decided to expand its September meeting to two days – Sept. 20 and 21 – to review the pros and cons of further easing. After an initial sharp drop upon publication of Bernanke’s speech, stocks came back, with the Dow DJIA -0.76% down 82 points in mid-morning trade. The dollar DXY +0.05% pared its losses. Many Fed watchers had expected at least a discussion of the options in today’s speech. Financial markets have been waiting for the speech to hear Bernake’s views on whether he thinks the economy will avoid a double-dip recession and what steps he might be willing to take to stave off a possible severe downturn. But Bernanke refrained, saying it was unclear how recent stock market weakness, debt-ceiling negotiations and the European debt crisis had impacted the economy. “It is difficult to judge by how much these developments have affected economic activity thus far, but it seems little doubt that they have hurt household and business confidence and that they pose ongoing risks to growth,” Bernanke said. Bernanke said the Fed expected “a moderate recovery” to continue and indeed strengthen over time. Bernanke also criticized Congress, saying the recent debate over the debt ceiling had hurt the economy. He called on Congress to not overlook the “fragility” of the economy in their efforts to bring the deficit under control. Making sure that fiscal policy does not hurt the economy and putting in place a sustainable long-term budget are not incompatible, he said. In his speech, Bernanke more clearly than ever before said the weak housing market was a big factor in the current disappointing recovery. He called for Congress and the White House to consider “good proactive housing policies” that could help speed the process of getting the sector on its feet. Several economists at Jackson Hole are advocating some form of debt forgiveness to pave the way for a stronger housing market. For instance, Glenn Hubbard, a former chief economic adviser to President George W. Bush, said he would favor using Fannie Mae and Freddie Mac to allow homeowners who are current on their mortgages to refinance even though their mortgages is now above the value of their homes. Some analysts are pushing President Barack Obama to put debt forgiveness on the table in the stimulus plan he is expected to unveil next month.

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