Investors in the US have welcomed a speech by Ben Bernanke in which he promised to do more to boost the economy if necessary.
But the Federal Reserve's chairman would not commit to further quantitative easing - only going as far as to say the central bank would not rule it out.
Mr Bernanke also highlighted the US' high level of unemployment - which he described as a "grave concern".
"It is important to achieve further progress, particularly in the labour market," he said in his annual address to central bankers in Jackson Hole, Wyoming.
"Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labour market conditions in a context of price stability."
Mr Bernanke defended the Fed's efforts to stimulate the economy to date, saying that research showed its first two rounds of bond purchases created at least two million jobs.
Market reaction to the speech was volatile, with stocks in the US and Europe losing their earlier gains in the moments following the speech. The FTSE 100 closed down 0.2% at 5708.07.
But stock markets in the US rose again, as investors appeared to interpret the speech more positively.
Paul Dales, senior US economist at Capital Economics, said Mr Bernanke had "taken a further step along the path to more policy stimulus, most likely a third round of asset purchases to be announced at the mid-September meeting (of the monetary policy committee)."
While Michael Derks, chief strategist at FXPro, described Mr Bernanke as "sympathetic".
"Another program of asset purchases from the Fed looks very likely within a short space of time," he added.
Investors are calling for further monetary easing to help spur economic growth, as the US struggles to expand.
The economy grew at a sluggish 1.7% annual rate in the latest quarter, the government estimated on Wednesday.
Hopes of a fiscal boost were raised after the central bank released the minutes of its meeting on 31 July.
They revealed that its policy committee said that action "would likely be warranted fairly soon" unless it saw evidence of "a substantial and sustainable strengthening" of the economy.