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Chairman Bernanke says Fed is ready to act

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Federal Reserve Board Chairman Ben Bernanke offered no new insight as to what action the central bank could take.

Federal Reserve Chairman Ben Bernanke said Thursday the Fed was poised to act if the U.S. economy stalls. But he offered no new insight about what, if anything, the central bank could do in the face of sluggish household spending, slowing job growth, persistent weakness in the housing market and the threat of a eurozone-wide recession.

In prepared remarks for testimony to the Joint Economic Committee of Congress, the central bank chief said the economy has grown at a moderate pace so far this year and that labor market conditions improved a bit at the end of last year and earlier in 2012. But he acknowledged that job growth had slowed and that it would take a pickup in economic activity to improve employment expansion.

"With unemployment still quite high and the outlook for inflation subdued, and in the presence of significant downside risks to the outlook posed by strains in global financial markets, the FOMC has continued to maintain a highly accommodative stance of monetary policy," Bernanke said, referring to the historically low interest rates that the Fed has said likely will continue until at least 2014.  

"The Federal Reserve remains prepared to take action as needed to protect the economy in the event that financial stresses escalate," Bernanke said.

Bernanke was testifying as eurozone officials worked on a plan to rescue banks in Spain, Europe's fourth-largest economy. If officials don't act soon and with conviction, the eurozone debt crisis threatens to plunge Europe into recession and perhaps bring the global economy down with it.

China's economy has already slowed and its banking officials cut benchmark interest rates by 25 basis points Thursday in an attempt to stimulate domestic demand in the world's No. 2 economy