UPDATE 1-FED FOCUS-Poker-faced Fed chief buys time for options

(Adds link to PDF of Jackson Hole highlights)

* Bernanke seen seeking time to build case for easing

* Receives high marks for pressuring fiscal officials

* Despite skeptics, Fed might extend balance sheet duration

By Mark Felsenthal

JACKSON HOLE, Wyo., Aug 28 (Reuters) - Like a skilled poker
player, Federal Reserve Chairman Ben Bernanke kept some cards
close to his vest when facing fellow central bankers in cowboy
country.

In doing so, he may have bought himself time to play the
strongest hand possible when he is ready.

Bernanke's speech on Friday at an annual Fed conference
here came at a time of alarm about a fading U.S. economic
recovery and concern about the health of Europe's banks.

Many were looking for a clear signal the central bank is
ready to step in with further monetary policy stimulus after
Bernanke led the Fed into taking massive stimulus measures over
the last few years.

He acknowledged slower-than-hoped-for growth in the world's
largest economy and warned that high long-term unemployment
could leave lasting scars.

Although he said the Fed would consider what more it could
do to boost growth -- comments that helped push up U.S. share
prices -- he stopped short of outlining new moves, unlike his
Jackson Hole speech last year that was seen as opening the door
to a second round of massive bond buying.

"Not much detail," was the curt analysis of Bernanke's
speech by a prominent analyst at the exclusive retreat, which
brings together an international elite of policymakers,
economic thinkers and well-connected financial gurus.

CAREFUL GOING

The Fed is caught between a flagging recovery and
persistently high unemployment on one side, and political
pressures against more monetary easing on the other. It has
already pushed interest rates close to zero and bought $2.3
trillion in bonds to try to lower longer-term borrowing costs.

The Fed is also split internally about what to do next,
adding to the challenge faced by Bernanke.

Participants at the conference gave the chairman -- who
looked relaxed in faded jeans and a polo shirt -- high marks
for deftly maneuvering the fine line between offering hope of
monetary relief without overcommitting the central bank.

"The Fed is going to continue to tread slowly," said Barry
Eichengreen, an economics professor at the University of
California at Berkeley.

The most tantalizing tidbit Bernanke provided was that the
Fed's next policy meeting will run for two days instead of one
on Sept. 20-21.

A two-day meeting will allow Fed staff to present studies
of possible courses of action and will let each of the 17
members of the policy-setting Federal Open Market Committee air
views on policy and where the economy is heading.

The expansion of the meeting underscores the degree to
which Bernanke is worried about high unemployment, weak
manufacturing data, stock market volatility and strains at
European banks.

It also suggests he may see a need to line up support for
more action at the Fed, where three policymakers dissented
against an early-August decision to let financial markets know
the central bank expects to hold interest rates at ultra-low
levels through the middle of 2013.

The opportunity for a fuller discussion suggests Bernanke
is inclined to loosen monetary policy further but wants more
data, such as the August jobs report due on Friday, to buttress
his case.

One idea clearly on the agenda is more bond buying matched
by a draining of bank reserves to keep the size of the Fed's
already bloated balance sheet in check.

This could help pressure longer-term interest rates lower
without fueling fears in financial markets the Fed's massive
balance sheet might eventually fuel inflation.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Take a look on conference: [FED/AHEAD]

PDF of Jackson Hole highlights:

link.reuters.com/byw43s

Highlights of Bernanke's speech: [ID:nN1E77O18V]

"Word cloud" of speech: r.reuters.com/qyt43s

Economic leaders fear policy paralysis: [ID:nN1E77Q02S]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

HEARTS AND MINDS

By emphasizing the process rather than tools, Bernanke may
have been seeking to smooth over the rift exposed by the three
who cast "no" votes at the central bank's last policy meeting.

Attendees at the conference here said the risk of future
dissent would not deter Bernanke from acting, but that the Fed
chairman would seek as much support as possible.

"Anything the Fed does will be more effective in terms of
calming the markets and restoring confidence if they are
unanimous when they do it," Eichengreen, a panelist at one of
the conference sessions, told Reuters Insider.

Detailed analysis by Fed staff economists on the possible
benefits of further balance sheet measures may also help a core
group of Fed policymakers close to Bernanke, that includes Vice
Chair Janet Yellen and New York Fed President William Dudley,
overcome skepticism about the effectiveness of new moves.

"They're done and they know it. They've got nothing left,"
scoffed an analyst attending the conference.

Despite the doubts, discussions on the sidelines of the
event made clear some at the Fed believe there is evidence an
effort to further flatten longer-term interest rates could help
the economy.

One U.S. monetary policy insider was heartened by the
recommendation by International Monetary Fund chief Christine
Lagarde at the conference that central bankers dive back into
unconventional measures to provide additional monetary help.

KUDOS FROM THE CROWD

Bernanke also got high marks for shifting some of the
burden for restoring growth to governments and politicians, a
theme also emphasized by Lagarde.

While addressing the importance of cutting deficits,
politicians should also be sensitive to the fragile recovery
and develop a less nerve-wracking process for making budget
decisions than the showdown in Congress that brought the United
States close to a debt default this summer, he said.

"To me the more interesting part of the chairman's remarks
was the shot across the bow of the government saying, 'Don't
keep layering expectations on the Federal Reserve guys, you
have a job to do,'" Columbia University professor Glenn Hubbard
told Reuters Insider.

Bernanke arrived in Wyoming several days early and told
attendees he had gone to a rodeo with his family. He jokingly
told the conference that seeing that slice of Americana had
given him a lot to think about.

He may have decided a little bit of cowboy reticence would
suit his Jackson Hole message.
(With additional reporting by Dan Burns and Ann Saphir;
Editing by Maureen Bavdek)