FEDERAL RESERVE chairman Ben Bernanke has said the US central bank “would not hesitate” to launch another round of bond purchases to drive borrowing costs lower if it looked like the economy needed it.

“We remain entirely prepared to take additional balance sheet actions as necessary to achieve our objectives,” Mr Bernanke said yesterday. “Those tools remained very much on the table and we would not hesitate to use them should the economy require that additional support.”

In response to the deepest recession in generations, the Fed lowered benchmark overnight rates to near zero in December 2008 and more than tripled its balance sheet by purchasing $2.3 trillion in government and mortgage bonds.

While Mr Bernanke held open the prospect of further bond buying, or quantitative easing, he did not offer any suggestion that a third round of purchases was necessarily in the offing.

In a statement after a two-day meeting, the Fed’s policy panel reiterated its expectation that rates would not rise until late 2014 at the earliest. It took no action to change monetary policy now.

Still, fresh projections released by the Fed showed the most dovish officials no longer want to put off a rate increase until 2016. The projections showed seven officials now believed it would be appropriate to raise borrowing costs some time in 2014, up from five in January, while only four wanted to wait longer.

In January, six officials wanted to wait until after 2014, including two who wanted to hold off until 2016.

“It looks like the more positive data over the past few months has affected the people at the more dovish end of the spectrum,” said Sean Incremona, an economist with 4Cast.

The Fed bumped up its US economic growth forecast for 2012 but lowered it for the next two years. – (Reuters)