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JACKSON HOLE, Wyoming - Federal Reserve Chairman Ben Bernanke tackles financial stability in a key speech on Friday but economists doubt he will provide solid clues about future policy action to calm the credit crunch.
Central bankers are gathering in this mountain resort for an annual symposium as financial markets tense for more losses from home loans, amid concern that U.S. mortgage giants Fannie Mae and Freddie Mac will need government cash.
This time last year, Bernanke told the conference the Fed would take steps to shield the economy from the U.S. housing collapse, but would not bail out investors.
Since then, the Fed has slashed interest rates and lined up billions of dollars in emergency credit to prevent markets from seizing up over mountainous home loan losses. But conditions remain strained.
I think he will bend over backward not to give markets much to go on. Just ask yourself what has happened since the last Federal Open Market Committee meeting, said Bob Eisenbeis, former head of research at the Atlanta Fed.
At the Aug 5 meeting of the Fed's interest-rate setting committee, the FOMC policy-makers held the benchmark federal funds rate steady at 2 percent, and stressed the risks regarding both inflation and growth against the backdrop of an ongoing housing contraction.
Inflation has picked up, but some of the underlying components of inflation have moderated, particularly oil. What can he say? questioned Eisenbeis, who is now chief monetary economist for Cumberland Advisers.
However, with consumer inflation at a 17-year high last month, Bernanke must reassure markets of his commitment to price stability, some believe.
He's going to have to talk about inflation, said Columbia University economist Charles Calomiris. He's going to have let people understand what his logic is on the trade-offs between inflation and the risks of recession.
Bernanke speaks at 8:00 a.m local time at the Kansas City Federal Reserve Bank's conference. Top officials from the European Central Bank, Bank of Japan and other senior policy-makers from around the world are also attending.
He will provide an outlook and describe what we've been through in the last year, said Zach Pandl, an economist at Lehman Brothers. The Fed remains quite concerned about growth.... All options are on the table.
Minneapolis Fed Bank President Gary Stern on Wednesday defended Fed support for Fannie Mae and Freddie Mac, whose shares have been pounded by investors fearful that a government bailout is inevitable in the face of rising mortgage losses.
The Fed was part of a U.S. Treasury plan to provide cash and capital to Fannie Mae and Freddie Mac, granting them the right to borrow money from the central bank at its discount window for short-term liquidity.
At the same time, Congress recently gave Treasury temporary emergency powers to shore up capital at the two companies, and Bernanke may remind markets that government tools to prop the companies up are now chiefly in the hands of Treasury Secretary Henry Paulson.
I hope we get more clarity from about the coordination between monetary and fiscal policy, said Paul McCulley, managing director bond fund giant Pacific Investment Management Co .

The Fed's done yeoman's work, but there are limits to what the Fed can deliver, McCulley said.