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Despite Wall St. hopes, Bernanke unlikely to air new economic boost

Many on Wall Street hope that Federal Reserve Chairman Ben Bernanke's highly anticipated speech today will unveil a new effort to boost the economy.

But economists say a major new program is unlikely, although Bernanke likely will lay out the Fed's options for lowering long-term interest rates even further.

Bernanke will speak at the annual economic conference in Jackson Hole, Wyo., at a pivotal moment for the U.S. economy. Growth has slowed. Stock prices have been gyrating. Europe is struggling to contain a spreading debt crisis. And analysts have been reducing their forecasts for growth this year and next.

The situation resembles the one Bernanke faced at last year's conference, when he responded by suggesting that the Fed could buy more government bonds to reduce long-term rates, stimulate spending and lift stock prices.

The Fed began buying $600 billion in Treasurys in November and completed its purchases in June.

Stock prices rose steadily throughout the Fed bond-buying program.

But few expect any such dramatic step this time because, just two weeks ago, Fed policymakers said they would keep short-term rates at record lows for two more years.

The Fed chairman likely will outline the economy's challenges and explain why growth probably will stay weak for several years, analysts said.

After its Aug. 9 meeting, the Fed said it would keep its options open in case conditions worsened.

These options include another round of government bond purchases. The $600 billion in Treasurys the Fed bought earlier this year was the second round of such purchases. Bernanke argued last month in testimony before Congress that the Fed's second round of purchases -- dubbed Quantitative Easing II , or QE2 -- helped keep rates down and stave off deflation.

Critics question whether those purchases helped the economy. Some argue that by injecting more dollars into the financial system, the Fed raised inflation pressures and potentially reduced consumers' purchasing power.

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