Fed Considering Options if Economy Stalls

Washington, DC, July 13, 2011 -- The Federal Reserve is considering taking additional steps if the economy continues to deteriorate.

While the Federal Reserve believes that the temporary shocks holding down economic activity will pass, the central bank is examining several untested means to stimulate growth if conditions worsen.

Options include another round of asset purchases, dubbed QE3, Fed chairman Ben Bernanke said Wednesday.

Another option, Bernanke said, would be for the Fed to provide more "explicit guidance" to the pledge that rates will stay low for "an extended period."

Bernanke was clear to stress that easing was not the only option under consideration and that the next Fed move could well be to tighten.

For now, Fed officials see a recovery that "will likely remain moderate," Bernanke said, with the unemployment rate falling "only gradually." Inflation is expected to subside in coming months, he said.