Federal Reserve Chairman Ben Bernanke used the backdrop of Jackson Hole, Wyo., to defend nontraditional monetary policies and to suggest the Fed will deploy stimulus tools again if economic conditions justify intervention.

Still, the Fed Chair remained noncomittal on whether the Fed is actually planning more asset purchases.

Bernanke did admit the aggressive purchase of mortgage-backed securities by the Fed created a situation of falling yields on MBS. But he contends the economy would have been worse off without Fed intervention.

"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 labor market conditions in a context of price stability," the Fed chair noted.

Bernanke's less-than-forthcoming report on what the Fed has on the table quashed hopes he would give investors and the market more direction on where monetary policy is heading.

Bernanke did take a bearish turn when discussing the potential risks of nontraditional Fed policies, including large-scale asset purchases involving mortgage-backed securities.

Four years after rolling out large purchases and expanding the Fed's balance sheet, long-term Treasury yields have been lowered, Bernanke noted.

"Three studies considering the cumulative influence of all the Federal Reserve's asset purchases, including those made under the MEP, found total effects between 80 and 120 basis points on the 10-year Treasury yield.These effects are economically meaningful," he noted.

Bernanke claims studies show the large scale purchases led to significant declines on corporate bonds and mortgage-backed securities yields.

"The first purchase program, in particular, has been linked to substantial reductions in MBS yields and retail mortgage rates," Bernanke said.

While the Fed chief was noncommittal about additional monetary intervention, Paul Dales, an economist with Capital Economics, is convinced Bernanke is actually laying the ground work for another round of aggressive monetary policy.

"Ben Bernanke has taken a further step along the path to more policy stimulus, most likely a third round of asset purchases (QE3) to be announced at the mid-September FOMC meeting," Dales said. He added, "together with the dovish minutes of the previous FOMC minutes, this is another clear sign that the Fed is ready to provide more policy stimulus."