Fed may need to take new action

The U.S. economic recovery risks being derailed and the Federal Reserve might have to take new actions to support growth, three Fed officials said. "The balance of risks" appears "tilted toward a weaker economy," Fed Vice Chairwoman Janet Yellen said in Boston Wednesday night, pointing to the possibility inflation would drop below the Fed's 2 percent goal or economic growth would slow. She said she was convinced the Fed should "provide further policy accommodation," either with assurances interest rates would stay low or by expanding the central bank's already sizable holdings of long-term securities. Yellen's views are often similar to those of Fed Chairman Ben Bernanke, The Washington Post said. Bernanke was scheduled to testify before Congress Thursday. The presidents of the Federal Reserve Banks of Atlanta and San Francisco separately expressed concerns Wednesday eurozone turmoil could derail the U.S. economic recovery. "I am giving more weight and higher probability to a negative influence on our economy coming from Europe," Atlanta Fed President Dennis Lockhart said in a speech in Ft. Lauderdale, Fla. If modest economic growth is no longer a realistic goal, then "further monetary actions to support the recovery will certainly need to be considered," he said. San Francisco Fed President John Williams said he was concerned not just about the European sovereign-debt crisis, but also about federal government spending cuts, which he said could hurt the U.S. economy. "The turmoil in Europe and government fiscal retrenchment in the United States raise the danger that the economy could perform worse than I expect," Williams said in a speech in Bellevue, Wash. Fed officials' next policy-making meeting is to take place June 19-20. A Fed report released Wednesday ahead of that meeting pointed to concerns businesses will cut back on hiring and investing due to uncertainties about U.S. political and fiscal outlook, as well as the eurozone crisis. But it also said the U.S. "economic outlooks remain positive." Still, the "beige book" -- a compilation of anecdotal reviews of the economy from the 12 regional Federal Reserve districts -- said "contacts were slightly more guarded in their optimism."