WASHINGTON – Falling energy and commodities prices are likely to slow inflation, Federal Reserve Chairman Ben S. Bernanke told the Senate Banking Committee, in the first of two days of testimony, according to Bloomberg News.
“There are some indications that inflation pressures are beginning to diminish,” Bernanke said. “The monthly data are noisy, however, and it will consequently be some time before we can be confident that underlying inflation is moderating as anticipated.”
The Fed chief said the central bank is more worried about rising prices and the tight labor market, and their potential to worsen inflation, than it is about the housing slowdown.
Overall, his comments were sunnier than anticipated, with Bernanke hinting he is in no hurry to raise or lower interest rates, which policymakers have kept at 5.25 percent since August. His remarks sparked a rally in both stocks and bonds.
The yield on the benchmark 10-year Treasury note was down 8 basis points, to 4.73 percent at 2:08 p.m., and the Dow Jones Industrial Average was up 86.93 points, to 12,741.94, Bloomberg said.
Bernanke’s full statement to the Senate Banking Committee can be found at www.federalreserve.gov.
