WASHINGTON (MNI) The following is a transcript from the news
conference with Federal Reserve Chairman Ben Bernanke, who said the Fed
“would have to respond” if it looks like inflation expectations are
becoming less anchored:
REPORTER: What is the right response if high oil prices persist. On
the one hand they push inflation higher. On the other they hurt the
economy by hurting spending. In the current environment, what is the
best strategy?
CHAIRMAN BERNANKE: Well, we are going to continue to see what
happens. Our anticipation is that oil prices will stabilize or tend to
come down. If that happens, or if at least oil prices don’t increase
significantly further, inflation will come down and we will have, we
will be close to our medium term objectives.
So as we look at oil prices, as you point out, we have to look at
both sides of the situation.
I do think that one of the key things that we will be looking at
will be inflation expectations because if medium-term inflation
expectations remain well anchored and stable so that firms are not
passing on, at least on an ongoing sustained basis, these higher costs
into broader prices and into creating broader inflation in the economy,
as long as inflation expectations are well stabilized, that won’t
happen.
Then we’ll feel more comfortable just watching and waiting and
seeing how things evolve.
Again if we fear that inflation expectations look like they are
becoming less anchored we would have to respond to that.
** Market News International Washington Bureau: (202) 371-2121 **
[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,MT$$$$]
