Fed officials vow to use all tools to help economy

By Mark Felsenthal

CHARLOTTE, North Carolina (Reuters) - Top Federal Reserve officials pledged on Friday to use all the tools at their disposal to spur lending and a U.S. economic recovery, but warned a rebound could be slow in coming.

"Conditions are not conducive to a substantial and sustained economic rebound, and the Fed will continue to be alert to ways that monetary policy can contribute to economic recovery," Fed Vice Chairman Donald Kohn told an audience at the College of Wooster in Ohio.

Fed Chairman Ben Bernanke said the U.S. central bank will continue to use the unorthodox methods it has resorted to since the financial crisis erupted in the summer of 2007 to settle markets and set the stage for a resumption of growth. He did not, however, offer a guess on when a recovery will occur.

"The Federal Reserve will make responsible use of all of its tools to stabilize financial markets and institutions, to promote the extension of credit to creditworthy borrowers, and to help build a foundation for economic recovery," Bernanke told a conference in Charlotte organized by the Richmond Federal Reserve Bank.

"Relieving disruptions in credit markets and restoring the flow of credit to households and businesses are essential if we are to see, as I expect, the gradual resumption of sustainable economic growth," he said.

BALANCE SHEET CHALLENGES

The officials spoke after the government announced the U.S. unemployment rate soared to 8.5 percent last month, a 25-year high. The report, however, follows a raft of recent data that has suggested an ebbing in the pace of the economy's decline.

The Fed has cut interest rates to near zero and pumped hundreds of billions of dollars into stressed credit markets to try to spur a recovery from a recession that began in December 2007, and Bernanke noted that the Fed has pledged to keep interest rates low for an extended period.