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December 16, 2009
Bernanke Tells Senate Panel Rising Inflation Is Unlikely
By REUTERS
WASHINGTON (Reuters) — The Federal Reserve chairman, Ben S. Bernanke, in a response to a lawmaker’s questions made public Tuesday, said the United States economy was operating so far beneath its potential that inflation was unlikely to become a problem.
The response was to a question asked by Senator Jim Bunning, a Republican from Kentucky, at Mr. Bernanke’s confirmation hearing for a second term.
In the hearing before the Senate Banking Committee earlier this month, Mr. Bernanke came under fire both for failing to prevent the financial crisis and for overextending the central bank in an attempt to ease the banking sector’s strains.
Mr. Bernanke, in a written response received by Mr. Bunning’s office on Monday, said high unemployment and idle factory capacity made it unlikely that inflation would post a rapid increase any time soon.
“The bulk of the evidence indicates that resource slack is now substantial,” Mr. Bernanke wrote. His response was posted on Mr. Bunning’s Web site.
“I continue to expect slack resources, together with the stability of inflation expectations, to contribute to the maintenance of low inflation in the period ahead,” he said.
The latest figures on producer prices outside the volatile food and energy sectors, published by the Labor Department on Tuesday, showed a surprising 0.5 percent spike, prompting a sell-off in both stocks and government bonds on inflation fears.
Asked about market gyrations, Mr. Bernanke argued that the recent rise in gold prices, which have surged to above $1,200 an ounce, were not a sign of increasing inflation expectations.
He also said he saw no sign of a bubble in the stock market, which has gained more than 60 percent from its March lows.
The Senate Banking Committee will vote on the nomination of Mr. Bernanke to a second four-year term on Thursday, the panel said on Tuesday. If the committee approves Mr. Bernanke, his nomination will be considered by the full Senate.
http://www.nytimes.com/2009/12/16/bu...l?ref=business
The response was to a question asked by Senator Jim Bunning, a Republican from Kentucky, at Mr. Bernanke’s confirmation hearing for a second term.
In the hearing before the Senate Banking Committee earlier this month, Mr. Bernanke came under fire both for failing to prevent the financial crisis and for overextending the central bank in an attempt to ease the banking sector’s strains.
Mr. Bernanke, in a written response received by Mr. Bunning’s office on Monday, said high unemployment and idle factory capacity made it unlikely that inflation would post a rapid increase any time soon.
“The bulk of the evidence indicates that resource slack is now substantial,” Mr. Bernanke wrote. His response was posted on Mr. Bunning’s Web site.
“I continue to expect slack resources, together with the stability of inflation expectations, to contribute to the maintenance of low inflation in the period ahead,” he said.
The latest figures on producer prices outside the volatile food and energy sectors, published by the Labor Department on Tuesday, showed a surprising 0.5 percent spike, prompting a sell-off in both stocks and government bonds on inflation fears.
Asked about market gyrations, Mr. Bernanke argued that the recent rise in gold prices, which have surged to above $1,200 an ounce, were not a sign of increasing inflation expectations.
He also said he saw no sign of a bubble in the stock market, which has gained more than 60 percent from its March lows.
The Senate Banking Committee will vote on the nomination of Mr. Bernanke to a second four-year term on Thursday, the panel said on Tuesday. If the committee approves Mr. Bernanke, his nomination will be considered by the full Senate.
http://www.nytimes.com/2009/12/16/bu...l?ref=business
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