Bernanke says US economy will grow moderately
February 14, 2007
US Federal Reserve chairman Ben Bernanke said in testimony before Congress on Wedensday that the nation’s economy should continue to grow moderately even though the housing market could still falter more than currently expected, hurting growth overall. He said that he expects inflation to continue to moderate but that there is still some risk and would not rule out further interest rate increases.
Mr. Bernanke specifically said that it would be “some time” before the Fed will be confident that inflation is moderating as expected, and that if it does not that the Fed is prepared to deal with it by raising interest rates further. Still, he said that the current rate, at 5.25 percent, is “likely” to both sustain economic growth and allow core inflation to decline.
Addressing the fears of some Democrats that the gap between rich and poor in the United States, which has widened recently, Mr. Bernanke said that the key to reversing this trend lies in providing education and job skills training. He also addressed the record US trade deficit, saying that protectionism is not the solution. He also said that China must do more to make its currency more flexible.
Following Mr. Bernanke’s comments, the US dollar weakened on global currency markets but the price of treasury bonds and the New York equities markets both saw advances.