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Bernanke - stimulus would diversify economic tools

Thu Jan 17, 2008 10:41am EST

WASHINGTON, Jan 17 (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke said on Thursday a fiscal stimulus would diversify policy-makers' toolbox as they try to ward off a U.S. recession.

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"I think a fiscal stimulus package could be helpful in the current circumstances. It would provide a broader base to support the economy than just that afforded by monetary policy and it would in some sense diversify our policy tools as we attempt to address the situation," Bernanke said told the U.S. House of Representatives Budget Committee.

However, he said a stimulus needed to be put into effect quickly, be temporary and ensure that "for every dollar put into stimulus we get a reasonable response in terms of extra activity for the next year or so." (Reporting by David Lawder; Editing by James Dalgleish)

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