Congress Quizzes Bernanke on Inflation
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, host:
And I'm Melissa Block.
Federal Reserve Chairman Ben Bernanke told lawmakers on Capitol Hill today that inflation still tops his list of potential threats to the economy. But Bernanke also had another message. He sees that threat receding over the next year and a half, and that sent the stock market up sharply.
NPR's Jack Speer reports.
JACK SPEER reporting:
In clear language, Bernanke told lawmakers that while he still views inflation as a threat, he said he doesn't expect it to derail the economy going forward.
Mr. BEN BERNANKE (Federal Reserve): With appropriate monetary policy and in the absence of significant unforeseen developments, the economy should continue to expand at a solid and sustainable pace, and core inflation should decline from its recent level.
SPEER: Some members of the Senate banking committee weren't so upbeat. Kentucky Republican Jim Bunning took Bernanke to task, saying after 17 straight interest rate hikes by the Fed, the chance of recession has risen sharply.
Senator JIM BUNNING (Republican, Kentucky): At the current pace, the Fed is going to overshoot and not even know it. By the time the full impact of interest rate increases is evident, it will be too late.
SPEER: But Bernanke said while he expects the economy to slow, he doesn't see a recession as very likely. He said the slow down will help bring inflation back under control. He was even willing to put a number on it.
Mr. BERNANKE: Inflation is projected to be two and a quarter percent to two and a half percent this year and then to edge lower to two percent to two and a quarter percent next year.
SPEER: Bernanke's prediction pleased Wall Street but also stands in stark contrast to recent history. The government's main inflation gauge, the Consumer Price Index, was released this morning and showed that overall prices are 4.3 percent higher than a year ago.
Jack Speer, NPR News, Washington. Transcript provided by NPR, Copyright NPR.