WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke warned on Monday that the U.S. economy remained under considerable strain and said that policy-makers must be ready to take decisive action to protect jobs and growth.
"Our nation's economic policy must vigorously address the substantial risks to financial stability and economic growth that we face," Bernanke told the Greater Austin Chamber of Commerce in prepared remarks.
Bernanke said that further interest rate cuts beneath the Fed's current target of 1 percent for its benchmark overnight funds rate were "certainly feasible", but suggested the Fed would also use other unconventional measures to aid growth.
"Although conventional interest rate policy is constrained by the fact that nominal interest rates cannot fall below zero, the second arrow in the Federal Reserve's quiver -- the provision of liquidity -- remains effective," he said.
(Reporting by Alister Bull; Editing by James Dalgleish)
