Federal Reserve Chairman Ben S. Bernanke rendered his most positive assessment of the U.S. economy yet in a speech Friday and gave credit in part to his own institution`s handling of the worst econ...

  Federal Reserve Chairman Ben S. Bernanke rendered his most positive assessment of the U.S. economy yet in a speech Friday and gave credit in part to his own institution`s handling of the worst economic crisis in decades. The U.S. and global economy "appear to be leveling out," Bernanke told an audience of some of the world`s leading economists and central bankers, and "prospects for a return to growth in the near term appear good." He warned, however, that the recovery is "likely to be relatively slow at first," with unemployment declining only gradually, the Washington Post reported.   The meat of Bernanke`s speech was not about the stabilizing economy, but rather an extensive defense of the Fed`s handling of the financial crisis and recession. It is part of a broader effort to shore up confidence in the central bank, which has come under fire in Congress and in public opinion polls for its role in various bailouts. And it comes as speculation heats up over whether President Obama will reappoint the chairman when his term expires Jan. 31. "History is full of examples in which the policy responses to financial crises have been slow and inadequate," Bernanke said at the annual symposium sponsored by the Kansas City Fed. By contrast, in the current crisis "policymakers in the U.S. and around the globe responded with speed and force to arrest a rapidly deteriorating and dangerous situation." With the recession waning, Bernanke and other Fed leaders are trying to make the case that their actions, including unconventional lending programs and the bailouts of Bear   Stearns and American International Group, are part of the reason.   Central bankers don`t make decisions on taxes and government spending, but fiscal policy was a major focus of this year`s Federal Reserve conference in Jackson Hole, the Wall Street Journal reported. Three questions drew attention at a Saturday session at the conference, which included central bankers from around the world, Wall Street economists and academics: Are deficits a threat that needs more attention? How well is the Obama administration`s fiscal stimulus plan working? And is more stimulus warranted? The answers offered: Yes. It isn`t clear. And no.   The world's central bankers seemed in no hurry to start raising interest rates as they headed home yesterday from the U.S. Federal Reserve's annual retreat in Jackson Hole, Wyoming, the FT reported. In private and in public, most officials indicated they believed that rates could be maintained at ultra-low levels for a considerable time without generating excess inflation, in spite of better economic data and a return of "animal spirits" in financial markets.   ECB officials led by President Jean-Claude Trichet greeted mounting evidence of an economic recovery with caution, suggesting they won't rush to reverse their emergency stimulus, Bloomberg reported. "We see some signs confirming that the real economy is starting to get out of the period of freefall," Trichet said at the U.S. Federal Reserve's annual symposium in Jackson Hole, Wyoming, on Aug. 22. This "does not mean at all that we do not have a very bumpy road ahead of us."   Central bankers warned that a global economic recovery shouldn't delay an overhaul of financial- market regulations following the worst banking crisis since World War II, Bloomberg reported. Federal Reserve Chairman Ben S. Bernanke used a weekend Fed symposium to single out the creation of rules limiting risk as one of the "difficult challenges" ahead. European Central Bank President Jean-Claude Trichet said "green shoots" aren't enough for him to declare the recovery sustainable and cautioned that officials must do "an enormous amount of work."   The prospect of a second term for Federal Reserve Chairman Ben Bernanke wasn`t discussed from the podium at the central bank`s annual retreat in Jackson Hole. But on the sidelines of the meeting, many said Mr. Bernanke should get to keep his job, and believe he will. With Mr. Bernanke`s term expiring in January, President Barack Obama must decide in the weeks ahead whether to offer him a second one. The vote of confidence at the Jackson Hole meetings amounts to a thumbs-up from his peers.   Bank of Japan Governor Masaaki Shirakawa said central banks should avoid inflating asset bubbles by keeping interest rates low for too long, Bloomberg reported. "Monetary policy should avoid accelerating a bubble through creating unfounded expectations for the continuation of low interest rates," the governor said Saturday at a forum hosted by the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming. Expectations for prolonged low rates "played an important role in expanding financial imbalances" that led to the current worldwide financial crisis, he said.   French banks will offer this week to reinforce rules governing the payment and disclosure of bonuses in meetings with Nicolas Sarkozy, president, and Christine Lagarde, the finance minister, FT reported. The concessions, adding detail to a code on pay agreed by French banks in February that aims to curb excessive risk-taking, will be used to bolster France's position at the G-20 meeting in Pittsburgh next month. Mr. Sarkozy, who has made the fight for stricter regulation on pay a priority of his government, is expected to urge other countries to implement rules agreed last spring as concerns mount about the resurgence of vast bonuses, particularly in the U.S.   SWINE FLU COULD SLOW DOWN THE GLOBAL ECONOMIC RECOVERY The markets have begun to pop champagne over global economic recovery, but the elephant lurking in the room -- swine flu -- could trample those green shoots, AFP reported. Spotted just four months ago, the new A(H1N1) influenza virus spread by June into a global pandemic and experts warn it could take a toll on productivity and financial systems, depending on the severity of outbreaks.(.) Faced with the unpredictable nature of flu viruses, economists say it is difficult to assess the impact of swine flu on the delicate global economic recovery taking shape amid the worst world recession since World War II. "As the severity of A(H1N1) is so far not severe, we would not expect the magnitude of the shock to the economy to be large relative to GDP," said Simonetta Nardin, a spokeswoman at the IMF. "The main threat to financial stability is the risk that high levels of absenteeism could lead to breakdowns in the functioning of key financial systems," she told AFP. (.)Nardin said t  hat the effects of swine flu on global financial stability and the world economy would be covered in future updates of the IMF`s Global Financial Stability Report and World Economic Outlook (WEO), "as warranted by events."