Bernanke may buy way out of crisis

Chairman Ben S. Bernanke and Federal Reserve policymakers may have to ramp up their purchases of mortgage securities and other assets after the economy and job market deteriorated further since they last met.

The Federal Open Market Committee, gathering yesterday and today (local time) in Washington, needs to redouble its efforts after the central bank's balance sheet shrank 17 percent from a $2.3 trillion December peak, Fed watchers said. The retreat came even as Bernanke acknowledged the chance that the unemployment rate will exceed 10 percent for the first time in a quarter century.

"It takes massive balance-sheet expansion to generate significant easing in financial conditions," said Andrew Tilton, an economist at Goldman Sachs Group Inc in New York who used to work at the Treasury. "More needs to be done."