Federal Reserve Chairman Ben Bernake (File photo by JIM WATSON/AFP/Getty Images)
(NBC) -- The nation's high unemployment rate is a "grave concern" and the Federal Reserve will step in to help the economy if it doesn't recover, Fed Chairman Ben Bernanke said Friday.
Speaking at the Fed's annual symposium for central bankers held in Jackson Hole, Wyo., Bernanke said the U.S. economy faces "daunting" challenges and that progress in reducing unemployment has been too slow, but he did not commit the Fed to any specific plan to boost the economy, such as a round of bond purchases to lower long-term interest rates.
In his speech, the Fed chief hinted that the Fed could act to spur growth if needed, saying "the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."
World markets have been on edge for weeks waiting to hear what Bernanke will say in Wyoming.
Bernanke was expected to acknowledge the Fed is actively considering another round of monetary easing. By stopping short of signaling another bond-buying program is imminent, he was potentially disappointing the markets, analysts said.
"There might be optimism ... expecting some QE coming our way and obviously that's weakened the dollar," Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank in New York, said ahead of Bernanke's speech. "It seems that the market is hoping for that."
In the same venue in 2010 Bernanke introduced what has come to be known as "QE2" -- a plan for "quantitative easing," where the Fed purchases long-dated bonds with the idea of moving money out of the Treasury market and into riskier assets in order to spur economic growth.
In his speech Friday, Bernanke defended the Fed's two previous rounds of quantitative easing, saying they drove the stock market higher and created more than 2 million jobs, and he played down the potential risks associated with them.
"The costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant," he said.
He also acknowledged that the weak employment market is a major threat to growth.
"The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years," Bernanke said.
In response to the financial crisis and recession of 2007-2009, the Fed has cut official rates to zero and bought some $2.3 trillion in government and mortgage securities.