Call it a lost two years, and counting.

The economic malaise afflicting industrialized economies on both sides of the Atlantic isn't as long-lived as Japan's lost decade yet. But as a distressingly weak June jobs report made clear on Friday, two years after a deep recession ended, central bankers have yet to engineer convincing recoveries.

Instead, wary of overusing the measures they have already rolled out, they find themselves waiting in the hope that these policies will be enough.

I'm a little bit more sympathetic to central bankers now than I was 10 years ago, U.S. Federal Reserve Chairman Ben Bernanke said with a faint smile when asked last month about earlier criticisms of Japanese policy.

Despite ultra-loose monetary policies, the Fed, the European Central Bank and the Bank of England all face lingering economic challenges.

Only the ECB has tip-toed into interest rate hikes. Even in the euro zone, though, analysts now anticipate only one more rate hike this year because risks from the debt crisis on the region's periphery stand in the way of a robust recovery.

At a time governments are focusing on austerity drives more than fresh stimulus, it would normally be up to the central banks to spur faster growth.

But above-target inflation and concerns about overusing asset purchases as a policy tool have kept the bar high for monetary easing at the Fed, ECB and BoE. Instead, these central bankers are watching warily, hoping their forecasts of stronger growth and lower inflation fall into place.

Central bankers are finding themselves with a much less appealing set of tradeoffs and much more constrained by the inflationary backdrop, said Julia Coronado, a former Fed economist now with BNP Paribas.

WIGGLE ROOM

The ECB may have the greatest room to maneuver. With rates at 1.5 percent, it has some rope to play with should a wider downturn push the euro zone economy and inflation back. In contrast, the Fed's benchmark rate is close to zero, while the BoE's is pegged at 0.5 percent.

The ECB also has the option to reintroduce some of its recently retired crisis measures to inject liquidity if the debt crisis begins to cause panic.

It could also re-activate its controversial government bond-buy program or go for a new round of more traditional quantitative easing, having purchased 60 billion euros of covered bonds between 2009-2010.

ECB President Jean-Claude Trichet on Thursday attributed slowing euro-zone growth at least in part to temporary factors. Still, some analysts believe growth concerns will return to the foreground for a central bank that has been preoccupied with keeping inflation in check.

With euro-zone economic growth slowing and inflationary pressures set to recede, we would not be surprised if the monetary tightening cycle is already over, John Higgins of Capital Economics said.

CORE MELTDOWN

The Fed, far from launching a tightening cycle, has just completed the latest -- and what it hopes is its last -- round of large-scale bond buying. Not only has the Fed cut rates to near zero, it has tripled its balance sheet to more than $2.8 trillion from pre-crisis levels.

In spite of this, the Fed is falling well short of its mandate to ensure sustainable full employment, with unemployment at 9.2 percent in June and growth projected to remain sluggish.

When Fed Chairman Ben Bernanke testifies before Congress next week, he will likely be pressed on why the Fed's easing programs have so far failed to put Americans back to work.

The more the central banks pull the same rabbit out of the hat and it still doesn't solve the problem, the higher is the risk that at some point the market will say, 'We've seen that rabbit before... and maybe I won't react as aggressively in response to your policy,' said Torsten Slok, an economist for Deutsche Bank.

Some Fed officials also worry about diminishing returns the more bloated the central bank's balance sheet gets.

Bernanke's response to lawmakers will likely be that unforeseen shocks -- Japan's earthquake, Europe's debt woes, Middle Eastern turmoil -- have been obstacles.

He is also likely to repeat that he believes these drags are set to diminish and that the Fed can spur growth if need be through more bond buying and other unconventional steps.

What holds the Fed back? Inflation, for one. Core inflation has risen at a 2.5 percent annual rate in the three months through May.

Politics may also play a role. The Fed's aggressive easing steps have been criticized both at home and abroad for sowing the seeds for inflation, and have been cited by some as a factor in the sharp rise in oil prices earlier this year.

Bernanke said in June that his main point in his comments about Japan was that a determined central bank can always do something about deflation. I think it's widely agreed that we succeeded in ending that deflation risk, he said.

While an economics professor at Princeton University, Bernanke criticized the Bank of Japan for poor policymaking, saying it was slow and inconsistent in responding to deflation. Japan's economy sputtered for ten years in the 1990s after a real estate bubble burst and has never really recovered.

PRINTING PRESS IDLE

While the Fed has been happy to see a threat of a dangerous deflationary spiral replaced with a modest rise in inflation, the Bank of England faces tougher choices. On Thursday it held its policy rate at a record low 0.5 percent despite inflation at 4.5 percent, more than double its 2 percent target.

Even though inflation looks set to climb in coming months, worries about persistently weak growth have led some members of the Monetary Policy Committee to mull the case for addition asset purchases to push more money into the economy.

The BoE has already purchased nearly 200 billion pounds of British government bonds and any resumption of quantitative easing would risk pushing up inflation expectations, which on some measures are already at the highest since October 2008.

Overall, we think that the bar for more asset purchases is relatively high against the backdrop of sticky high inflation, said Joost Beaumont, an economist at ABN AMRO. Meanwhile, recent data have been consistent with the economy currently going through a weak phase, but have not pointed to a slowdown large enough to turn on the printing press again.

(Additional reporting by David Milliken in London, Editing by Chizu Nomiyama)

Japan BNP Paribas Ben Bernanke