WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation.
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
Showing posts with label inflation. Show all posts
Showing posts with label inflation. Show all posts
Sunday, March 6, 2011
Bernanke seeks to ease inflation fears
WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation.
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
Bernanke seeks to ease inflation fears
WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation.
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
Bernanke seeks to ease inflation fears
WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation.
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
Bernanke seeks to ease inflation fears
WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation.
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
Bernanke seeks to ease inflation fears
WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation.
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
Bernanke seeks to ease inflation fears
WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation.
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
If he's wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation.
Bernanke's credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn't rise too high.
Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so.
"The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.
Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged.
Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That's 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008.
Sen. Patrick Toomey, R-Penn., called the rise in commodity prices "stunning." Toomey said he worries about the effects of those higher prices, combined with the Fed's efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be "planting the seeds of serious inflation down the road."
Bernanke defended the Fed's $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June.
Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds.
"Once price stability has been lost, it is difficult and very costly to regain," warned Sen. Richard Shelby of Alabama, the panel's top-ranking Republican.
Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession.
Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed's stimulative policies.
"I see food prices rising," said Sen. Robert Menendez, D-N.J. "I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family."
One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become "negligible."
Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won't cause out-of-control inflation.
Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said.
The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule.
On a separate issue, Bernanke said a failure by Congress to boost the government's borrowing authority would be an "extremely dangerous and a recovery-ending event."
by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM
Bernanke seeks to ease inflation fears
Saturday, February 19, 2011
Bernanke calls for nations to rebalance gaps in trade
PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
Bernanke calls for nations to rebalance gaps in trade
PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
Bernanke calls for nations to rebalance gaps in trade
PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
Bernanke calls for nations to rebalance gaps in trade
PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
Bernanke calls for nations to rebalance gaps in trade
PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
Bernanke calls for nations to rebalance gaps in trade
PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
Bernanke calls for nations to rebalance gaps in trade
PARIS - Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, such as China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
He also called on nations with persistent trade deficits, such as the United States, to narrow budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at a financial conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
"None of these changes will be easy or immediate," Bernanke said.
The flow of capital and global imbalances more generally were expected to be on the table at the Group of 20 industrialized and emerging nations meeting in Paris, which began Friday and continues today. Bernanke and Treasury Secretary Timothy Geithner are representing the United States.
"If there is no stabilizing system, then you can have situation where like today, you have a two-speed recovery and demand is not optimally allocated around the world," Bernanke said in a question-and-answer session following his speech.
Emerging economies such as China are growing quickly, while industrialized countries such as the United States are expanding only slowly.
In his call for a rebalancing of the global economy, the Fed chairman singled out no specific countries. Instead, he urged those with large trade surpluses to let their currencies rise freely, encourage consumers to spend more and rely less on export-led growth. That was a reference to China.
Similarly, Bernanke said countries with sizable trade deficits must reduce government spending over time. This reference was to the United States.
The Fed chief's tone was milder than in a speech he gave in November when he struck back at China and other global critics for challenging the Fed's $600 billion Treasury bond-purchase program. The purchases are intended to lower interest rates, lift stock prices and encourage more spending by U.S. consumers and businesses.
Critics have said the bond purchases could help ignite inflation or speculative investment. China and some other countries called the purchases a scheme to drive down the dollar and give U.S. exporters an unfair edge. A lower dollar makes U.S. products cheaper.
Emerging countries such as Thailand and Indonesia feared that falling Treasury yields would send money flooding their way in search of higher returns. Those markets could be left vulnerable to a crash if investors later decided to pull out and move their money elsewhere. In his November speech, Bernanke warned China that it and other developing nations were putting the global economy at risk by keeping their currencies artificially low.
Bernanke struck a more professorial tone in his remarks Friday. He stressed that countries must collaborate to confront financial threats. And he didn't specifically discuss the Fed's bond-purchase program.
Looking back at the global financial crisis, the Fed chief said the United States and other countries share blame. Countries with trade surpluses plowed money into mortgage and other investments in the United States, helping escalate their value. Bernanke said a paper he co-wrote and presented to the financial-stability forum in Paris confirms this.
But he also said the United States failed to safely absorb money flooding in from emerging nations such as China, Middle Eastern oil countries and industrialized countries in Europe.
by Greg Keller and Jeannine Aversa Associated Press Feb. 19, 2011 12:00 AM
Bernanke calls for nations to rebalance gaps in trade
Tuesday, July 6, 2010
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Yahoo! Finance July 2, 2010, 10:32 pm EDT
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment
Fundamental Forecast for Gold: Bearish
- Gold Falls Most Since February as Investors Raise Cash, Boost Margins
- Technical Positioning Hints Gold to Decline, Sellers Eyeing $1700 Figure
Gold prices are set to continue moving lower after last week’s momentous selloff as an increasingly gloomy outlook for global economic growth weighs on inflation expectations and feeds risk aversion, encouraging investors to cash out of their holdings of the yellow metal.
Despite a crippling decline that bore all the marks of directional conviction, pin-pointing a clear catalyst for last week’s price action became elusive considering gold tumbled even as stocks declined, seemingly erasing its status as a safe-haven asset developed over the second quarter. An array of explanations followed, with many attributing the move to portfolio re-allocation. Put simply, this argument suggests that traders sold off their gold positions to beef up margins and raise cash having taken losses on other assets amid a widespread return to risk aversion while the yellow metal struggled to maintain upward momentum having set a record high at $1265.
Another plausible interpretation points to eroding inflation expectations. Increasingly lackluster US economic data has trimmed investors’ expectations for recovery in America and the world at large, particularly as other engines of expansion also falter. Indeed, debt-cutting measures and rising financing costs promise to keep Europe sidelined for the foreseeable future, Japan remains mired in deflation, and China is stepping up efforts to slow its buoyant growth amid fears of overheating. On balance, this translates into a tepid outlook for price growth, eroding investors’ demand for an inflation hedge that had driven gold prices higher through 2009 and the beginning of this year. Indeed, the US 2-year breakeven rate, the spread between nominal and inflation-adjusted 2-year Treasury yields, has dropped to an eight-month low, hinting traders are betting on decidedly weak price growth for the time being. Interestingly, the 20-day correlation between the 2-year breakeven and spot gold has jumped to 0.63, the highest since late April.
In either case, the outlook for gold in the week ahead seems to favor further losses. Arguments favoring continued risk aversion run parallel to those calling for a period of low inflation, amounting to reflections of growing concerns about the fate of the global recovery. Absent an unlikely boost in confidence, the distinct possibility of a marked slowdown from last year’s break-beck rebound and increasingly loud calls for a “double dip” promise to keep the yellow metal firmly on the defensive.
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Yahoo! Finance July 2, 2010, 10:32 pm EDT
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment
Fundamental Forecast for Gold: Bearish
- Gold Falls Most Since February as Investors Raise Cash, Boost Margins
- Technical Positioning Hints Gold to Decline, Sellers Eyeing $1700 Figure
Gold prices are set to continue moving lower after last week’s momentous selloff as an increasingly gloomy outlook for global economic growth weighs on inflation expectations and feeds risk aversion, encouraging investors to cash out of their holdings of the yellow metal.
Despite a crippling decline that bore all the marks of directional conviction, pin-pointing a clear catalyst for last week’s price action became elusive considering gold tumbled even as stocks declined, seemingly erasing its status as a safe-haven asset developed over the second quarter. An array of explanations followed, with many attributing the move to portfolio re-allocation. Put simply, this argument suggests that traders sold off their gold positions to beef up margins and raise cash having taken losses on other assets amid a widespread return to risk aversion while the yellow metal struggled to maintain upward momentum having set a record high at $1265.
Another plausible interpretation points to eroding inflation expectations. Increasingly lackluster US economic data has trimmed investors’ expectations for recovery in America and the world at large, particularly as other engines of expansion also falter. Indeed, debt-cutting measures and rising financing costs promise to keep Europe sidelined for the foreseeable future, Japan remains mired in deflation, and China is stepping up efforts to slow its buoyant growth amid fears of overheating. On balance, this translates into a tepid outlook for price growth, eroding investors’ demand for an inflation hedge that had driven gold prices higher through 2009 and the beginning of this year. Indeed, the US 2-year breakeven rate, the spread between nominal and inflation-adjusted 2-year Treasury yields, has dropped to an eight-month low, hinting traders are betting on decidedly weak price growth for the time being. Interestingly, the 20-day correlation between the 2-year breakeven and spot gold has jumped to 0.63, the highest since late April.
In either case, the outlook for gold in the week ahead seems to favor further losses. Arguments favoring continued risk aversion run parallel to those calling for a period of low inflation, amounting to reflections of growing concerns about the fate of the global recovery. Absent an unlikely boost in confidence, the distinct possibility of a marked slowdown from last year’s break-beck rebound and increasingly loud calls for a “double dip” promise to keep the yellow metal firmly on the defensive.
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Yahoo! Finance July 2, 2010, 10:32 pm EDT
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment
Fundamental Forecast for Gold: Bearish
- Gold Falls Most Since February as Investors Raise Cash, Boost Margins
- Technical Positioning Hints Gold to Decline, Sellers Eyeing $1700 Figure
Gold prices are set to continue moving lower after last week’s momentous selloff as an increasingly gloomy outlook for global economic growth weighs on inflation expectations and feeds risk aversion, encouraging investors to cash out of their holdings of the yellow metal.
Despite a crippling decline that bore all the marks of directional conviction, pin-pointing a clear catalyst for last week’s price action became elusive considering gold tumbled even as stocks declined, seemingly erasing its status as a safe-haven asset developed over the second quarter. An array of explanations followed, with many attributing the move to portfolio re-allocation. Put simply, this argument suggests that traders sold off their gold positions to beef up margins and raise cash having taken losses on other assets amid a widespread return to risk aversion while the yellow metal struggled to maintain upward momentum having set a record high at $1265.
Another plausible interpretation points to eroding inflation expectations. Increasingly lackluster US economic data has trimmed investors’ expectations for recovery in America and the world at large, particularly as other engines of expansion also falter. Indeed, debt-cutting measures and rising financing costs promise to keep Europe sidelined for the foreseeable future, Japan remains mired in deflation, and China is stepping up efforts to slow its buoyant growth amid fears of overheating. On balance, this translates into a tepid outlook for price growth, eroding investors’ demand for an inflation hedge that had driven gold prices higher through 2009 and the beginning of this year. Indeed, the US 2-year breakeven rate, the spread between nominal and inflation-adjusted 2-year Treasury yields, has dropped to an eight-month low, hinting traders are betting on decidedly weak price growth for the time being. Interestingly, the 20-day correlation between the 2-year breakeven and spot gold has jumped to 0.63, the highest since late April.
In either case, the outlook for gold in the week ahead seems to favor further losses. Arguments favoring continued risk aversion run parallel to those calling for a period of low inflation, amounting to reflections of growing concerns about the fate of the global recovery. Absent an unlikely boost in confidence, the distinct possibility of a marked slowdown from last year’s break-beck rebound and increasingly loud calls for a “double dip” promise to keep the yellow metal firmly on the defensive.
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Yahoo! Finance July 2, 2010, 10:32 pm EDT
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment
Fundamental Forecast for Gold: Bearish
- Gold Falls Most Since February as Investors Raise Cash, Boost Margins
- Technical Positioning Hints Gold to Decline, Sellers Eyeing $1700 Figure
Gold prices are set to continue moving lower after last week’s momentous selloff as an increasingly gloomy outlook for global economic growth weighs on inflation expectations and feeds risk aversion, encouraging investors to cash out of their holdings of the yellow metal.
Despite a crippling decline that bore all the marks of directional conviction, pin-pointing a clear catalyst for last week’s price action became elusive considering gold tumbled even as stocks declined, seemingly erasing its status as a safe-haven asset developed over the second quarter. An array of explanations followed, with many attributing the move to portfolio re-allocation. Put simply, this argument suggests that traders sold off their gold positions to beef up margins and raise cash having taken losses on other assets amid a widespread return to risk aversion while the yellow metal struggled to maintain upward momentum having set a record high at $1265.
Another plausible interpretation points to eroding inflation expectations. Increasingly lackluster US economic data has trimmed investors’ expectations for recovery in America and the world at large, particularly as other engines of expansion also falter. Indeed, debt-cutting measures and rising financing costs promise to keep Europe sidelined for the foreseeable future, Japan remains mired in deflation, and China is stepping up efforts to slow its buoyant growth amid fears of overheating. On balance, this translates into a tepid outlook for price growth, eroding investors’ demand for an inflation hedge that had driven gold prices higher through 2009 and the beginning of this year. Indeed, the US 2-year breakeven rate, the spread between nominal and inflation-adjusted 2-year Treasury yields, has dropped to an eight-month low, hinting traders are betting on decidedly weak price growth for the time being. Interestingly, the 20-day correlation between the 2-year breakeven and spot gold has jumped to 0.63, the highest since late April.
In either case, the outlook for gold in the week ahead seems to favor further losses. Arguments favoring continued risk aversion run parallel to those calling for a period of low inflation, amounting to reflections of growing concerns about the fate of the global recovery. Absent an unlikely boost in confidence, the distinct possibility of a marked slowdown from last year’s break-beck rebound and increasingly loud calls for a “double dip” promise to keep the yellow metal firmly on the defensive.
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Yahoo! Finance July 2, 2010, 10:32 pm EDT
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment
Fundamental Forecast for Gold: Bearish
- Gold Falls Most Since February as Investors Raise Cash, Boost Margins
- Technical Positioning Hints Gold to Decline, Sellers Eyeing $1700 Figure
Gold prices are set to continue moving lower after last week’s momentous selloff as an increasingly gloomy outlook for global economic growth weighs on inflation expectations and feeds risk aversion, encouraging investors to cash out of their holdings of the yellow metal.
Despite a crippling decline that bore all the marks of directional conviction, pin-pointing a clear catalyst for last week’s price action became elusive considering gold tumbled even as stocks declined, seemingly erasing its status as a safe-haven asset developed over the second quarter. An array of explanations followed, with many attributing the move to portfolio re-allocation. Put simply, this argument suggests that traders sold off their gold positions to beef up margins and raise cash having taken losses on other assets amid a widespread return to risk aversion while the yellow metal struggled to maintain upward momentum having set a record high at $1265.
Another plausible interpretation points to eroding inflation expectations. Increasingly lackluster US economic data has trimmed investors’ expectations for recovery in America and the world at large, particularly as other engines of expansion also falter. Indeed, debt-cutting measures and rising financing costs promise to keep Europe sidelined for the foreseeable future, Japan remains mired in deflation, and China is stepping up efforts to slow its buoyant growth amid fears of overheating. On balance, this translates into a tepid outlook for price growth, eroding investors’ demand for an inflation hedge that had driven gold prices higher through 2009 and the beginning of this year. Indeed, the US 2-year breakeven rate, the spread between nominal and inflation-adjusted 2-year Treasury yields, has dropped to an eight-month low, hinting traders are betting on decidedly weak price growth for the time being. Interestingly, the 20-day correlation between the 2-year breakeven and spot gold has jumped to 0.63, the highest since late April.
In either case, the outlook for gold in the week ahead seems to favor further losses. Arguments favoring continued risk aversion run parallel to those calling for a period of low inflation, amounting to reflections of growing concerns about the fate of the global recovery. Absent an unlikely boost in confidence, the distinct possibility of a marked slowdown from last year’s break-beck rebound and increasingly loud calls for a “double dip” promise to keep the yellow metal firmly on the defensive.
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
Yahoo! Finance July 2, 2010, 10:32 pm EDT
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment
Fundamental Forecast for Gold: Bearish
- Gold Falls Most Since February as Investors Raise Cash, Boost Margins
- Technical Positioning Hints Gold to Decline, Sellers Eyeing $1700 Figure
Gold prices are set to continue moving lower after last week’s momentous selloff as an increasingly gloomy outlook for global economic growth weighs on inflation expectations and feeds risk aversion, encouraging investors to cash out of their holdings of the yellow metal.
Despite a crippling decline that bore all the marks of directional conviction, pin-pointing a clear catalyst for last week’s price action became elusive considering gold tumbled even as stocks declined, seemingly erasing its status as a safe-haven asset developed over the second quarter. An array of explanations followed, with many attributing the move to portfolio re-allocation. Put simply, this argument suggests that traders sold off their gold positions to beef up margins and raise cash having taken losses on other assets amid a widespread return to risk aversion while the yellow metal struggled to maintain upward momentum having set a record high at $1265.
Another plausible interpretation points to eroding inflation expectations. Increasingly lackluster US economic data has trimmed investors’ expectations for recovery in America and the world at large, particularly as other engines of expansion also falter. Indeed, debt-cutting measures and rising financing costs promise to keep Europe sidelined for the foreseeable future, Japan remains mired in deflation, and China is stepping up efforts to slow its buoyant growth amid fears of overheating. On balance, this translates into a tepid outlook for price growth, eroding investors’ demand for an inflation hedge that had driven gold prices higher through 2009 and the beginning of this year. Indeed, the US 2-year breakeven rate, the spread between nominal and inflation-adjusted 2-year Treasury yields, has dropped to an eight-month low, hinting traders are betting on decidedly weak price growth for the time being. Interestingly, the 20-day correlation between the 2-year breakeven and spot gold has jumped to 0.63, the highest since late April.
In either case, the outlook for gold in the week ahead seems to favor further losses. Arguments favoring continued risk aversion run parallel to those calling for a period of low inflation, amounting to reflections of growing concerns about the fate of the global recovery. Absent an unlikely boost in confidence, the distinct possibility of a marked slowdown from last year’s break-beck rebound and increasingly loud calls for a “double dip” promise to keep the yellow metal firmly on the defensive.
Gold to Decline on Fading Inflation Outlook, Portfolio Adjustment - Yahoo! Finance
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