Bernanke says Fed ready to act on Europe Federal Reserve chairman Ben Bernanke said the European crisis poses "significant risks" to the US economy and the Fed is "prepared to take action as needed" if conditions get worse. "The situation in Europe poses significant risks to the US financial system and economy and must be monitored closely," said Mr Bernanke in prepared testimony to the Joint Economic Committee of Congress. As always, the Federal Reserve remains prepared to take action as needed to protect the US financial system and economy in the event that financial stresses escalate. The cautious remarks may suggest that Mr Bernanke prefers not to act preemptively against risks from Europe but instead to intervene robustly if the outcome across the Atlantic is bad. Mr Bernanke did not discuss policy options for Fed action, but on Wednesday nnight vice-chair Janet Yellen pointed to further balance sheet changes - such as buying more bonds in a third round of quantitative easing - as possible options. The Fed chairman did not sound a strong alarm about weak payrolls data- the US added only 69,000 jobs in May - saying that the "apparent slowing in the labour market may have been exaggerated by issues related to seasonal adjustment and the unusually warm weather this past winter." But it may also be the case that the larger gains seen late last year and early this year were associated with some catch-up in hiring on the part of employers who had pared their workforces aggressively during and just after the recession. Mr Bernanke said that "economic growthhas continued at a moderate rate so far this year" and "appears poised to continue at a moderate pace over coming quarters, supported in part by accommodative monetary policy." That suggests the Fed's central forecast is that downside risks do not materialise and the economy keeps growing. As he increasingly does on his trips to Capitol Hill, Mr Bernanke took US legislators to task for their failure to tackle medium-term fiscal policy. "A severe tightening of fiscal policy at the beginning of next year that is built into current law - the so-called fiscal cliff - would, if allowed to occur, pose a significant threat to the recovery," he said. "Fortunately, avoiding the fiscal cliff and achieving long-term fiscal sustainability are fully compatible and mutually reinforcing objectives," he said. Preventing a sudden and severe contraction in fiscal policy will support the transition back to full employment, which should aid long-term fiscal sustainability.