Tuesday, February 20, 2007
Bernanke: US Economy healthy, but ...
Growth is solid, but inflation remains a risk; Fed ready to take action if needed, chairman says. Federal Reserve Chairman Ben Bernanke on Wednesday said the U.S. economy appeared sound with inflation easing, as he expressed confidence the current level of interest rates would cut further into price pressures. "Overall, the U.S. economy seems likely to expand at a moderate pace this year and next, with growth strengthening somewhat as the drag from housing diminishes," Bernanke told the Senate Banking Committee.
While Bernanke said the Fed's current policy stance, with overnight interest rates at 5.25 percent, was likely gradually to bring nonfood, nonenergy inflation down further, he said the central bank was prepared to act to beat back inflation if necessary.The U.S. central bank has held benchmark borrowing costs steady since pushing them up to their current level last June.
Read the full story at: http://money.cnn.com/2007/02/14/news/economy/bernanke.reut/index.htm?postversion=2007021415
Like the Bank of England and the European Central Bank, the Federal Reserve has as its main target the control of inflation, and uses interest rate setting as its monetary policy instrument. Unlike the Bank of England, however, the Fed does not have an explicit inflation band which is deemed as acceptable. The Fed is therefore holding steady with the current interest rate, expecting this level to keep a lid on inflationary pressure, but keeping a close watch on inflation as economic growth increases, ready to increase interest rates should inflation start to increase.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Monetary policy is discussed in detail in chapters 5 and 11 (at principles and intermediate level, respectively). Find out how to get LiveEcon at www.liveecon.com Download this blog as a Blogcast via the website.
Growth is solid, but inflation remains a risk; Fed ready to take action if needed, chairman says. Federal Reserve Chairman Ben Bernanke on Wednesday said the U.S. economy appeared sound with inflation easing, as he expressed confidence the current level of interest rates would cut further into price pressures. "Overall, the U.S. economy seems likely to expand at a moderate pace this year and next, with growth strengthening somewhat as the drag from housing diminishes," Bernanke told the Senate Banking Committee.
While Bernanke said the Fed's current policy stance, with overnight interest rates at 5.25 percent, was likely gradually to bring nonfood, nonenergy inflation down further, he said the central bank was prepared to act to beat back inflation if necessary.The U.S. central bank has held benchmark borrowing costs steady since pushing them up to their current level last June.
Read the full story at: http://money.cnn.com/2007/02/14/news/economy/bernanke.reut/index.htm?postversion=2007021415
Like the Bank of England and the European Central Bank, the Federal Reserve has as its main target the control of inflation, and uses interest rate setting as its monetary policy instrument. Unlike the Bank of England, however, the Fed does not have an explicit inflation band which is deemed as acceptable. The Fed is therefore holding steady with the current interest rate, expecting this level to keep a lid on inflationary pressure, but keeping a close watch on inflation as economic growth increases, ready to increase interest rates should inflation start to increase.
The much acclaimed new interactive learning package LiveEcon can help you understand the economics behind these important policy events. Monetary policy is discussed in detail in chapters 5 and 11 (at principles and intermediate level, respectively). Find out how to get LiveEcon at www.liveecon.com Download this blog as a Blogcast via the website.
# posted by Sam @ 14:45 
