US central bank boss Ben Bernanke today vowed to step in to prop up a fragile US economic recovery if needed as he conceded growth had been weaker than the Federal Reserve had expected.

Amid growing talk that the world's largest economy is headed for a double-dip recession, the Federal Reserve chairman said that the recovery around the world still had a long way to run and that unemployment remained "too high". But the US central bank was ready to help if needed, Bernanke said in his speech at the Jackson Hole symposium of central bankers in Wyoming.

His remarks helped stock markets rally as they looked to the Fed to pump money into the US economy, although they had initially fallen as traders digested his gloomy remarks on the recent slowdown in growth.

Having taking radical action to rekindle growth during the recession, Bernanke denied that policymakers had run out of options now the recovery was faltering.

"The Federal Reserve is already supporting the economic recovery by maintaining an extraordinarily accommodative monetary policy, using multiple tools," he said in his speech, entitled The Economic Outlook and Monetary Policy. "Should further action prove necessary, policy options are available to provide additional stimulus.

"The committee will certainly use its tools as needed to maintain price stability – avoiding excessive inflation or further disinflation – and to promote the continuation of the economic recovery."

Economists had been divided ahead of the speech as to whether Bernanke would provide any hints on the prospects of the Fed embarking on more quantitative easing (QE) – the system whereby it buys assets such as government bonds from banks and the commercial sector, pumping more cash into the financial system while at the same time cutting market rates.

As expected, Bernanke steered clear of giving the market any strong hints on what might prompt more QE or any other stimulus. "At this juncture, the committee has not agreed on specific criteria or triggers for further action," he said.

Speculation of more QE has risen over this week as a number of closely watched US economic indicators, particularly relating to the housing market, have come in worse than expected.

Bernanke highlighted several weak spots in the US recovery, including "slower-than-expected growth in consumer spending, as well as continued weakness in residential and non-residential construction".

He said: "Although private final demand, output and employment have indeed been growing for more than a year, the pace of that growth recently appears somewhat less vigorous than we expected."

In the longer term, he was more optimistic, predicting "some pickup" in growth in 2011 and subsequent years, although he conceded that "the economy remains vulnerable to unexpected developments".

He also outlined global problems. "For much of the world, the task of economic recovery and repair remains far from complete. In many countries, including the United States and most other advanced industrial nations, growth during the past year has been too slow and joblessness remains too high. Financial conditions are generally much improved, but bank credit remains tight; moreover, much of the work of implementing financial reform lies ahead of us," he said.

Bernanke's remarks follow news earlier today that the US economy grew at a much slower pace than first estimated in the second quarter.

The US government said GDP grew at an annual pace of 1.6%, down from the 2.4% it had estimated a month ago. But that figure was above the 1.4% forecast by a Reuters poll of analysts. Some had been expecting an even weaker reading after the slew of downbeat indicators in recent weeks.

While the US recovery lost pace in the second quarter, the UK was accelerating – although it tends to lag developments in America by several months. Official UK figures this morning showed that the British economy grew at the fastest pace in nearly a decade in the second quarter, higher than initially estimated, thanks to a pick-up in the construction industry and strong household spending.

The Office for National Statistics' second estimate for the second quarter put quarterly GDP growth at 1.2%, up from the initial estimate of 1.1% released a month ago.