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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: loantech who wrote (41175)11/15/2005 4:21:19 PM
From: mishedlo  Read Replies (1) of 116555
 
Inflation too high: Bernanke

WASHINGTON (Reuters) - Federal Reserve Chairman nominee Ben Bernanke said on Tuesday U.S. headline inflation was currently above rates desirable in the long run but focusing on the long-term trend was most important for monetary policy.

In explaining why he favored the Fed adopting a long-term inflation "objective," Bernanke told the Sentate Banking Committee that it was important to look beyond short-term volatility in inflation rates.

"The inflation objective is explicitly a long-term or medium term objective," said Bernanke. "It focuses on, for example, core inflation to avoid getting involved in short-term fluctuations in energy prices and the like."

"My principal concern at that point would not be that inflation had temporarily risen above its normal range -- for example current inflation is above the range that in the long-run would be desirable," he said. "But the concern would be that expectations about inflation going a year or two into the future had become unhinged or unanchored."

Bernanke said naming a range for desired long-term inflation "doesn't change the underlying dynamic."

"It's only an attempt to perhaps provide a bit of additional confidence, a bit of additional assurance or a bit of additional certainty to the markets about the Federal Reserve's long-term objective."

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