Bernanke signals shift to quantitative easing

Ben Bernanke, the chairman of the Federal Reserve, has hinted that the central bank will turn increasingly to its armoury of quantitative easing tools with its stock of rate cuts almost spent.

With the Federal Open Market Committee's (FOMC) federal funds target at 1% and the effective federal funds rate at 0.52% on Monday, the Fed has little room to cut rates further to boost aggregate demand and ward off deflation.

Bernanke on Monday acknowledged that the scope for rate cuts to support the e