U.S. Economy: Tough ConditionsBy Reuters - | Posted 2008-07-17 Print
On the second day of two days of congressional testimony, the Fed chairman painted a gloomier economic picture than in recent weeks.
Speaking about economic conditions, Bernanke acknowledged that rising unemployment, tight credit and higher prices are pinching many people, even though the economy continues to grow.
"This is clearly a rough time," he said in response to questions from lawmakers. "Conditions are tough on average families," he added.
But the Fed is also increasingly worried that inflation may be flaring, as the minutes of the June meeting emphasized.
Bernanke is under pressure both within and outside the Fed for not fighting inflation more aggressively with higher benchmark interest rates.
Fresh evidence of inflationary pressures surfaced in a government report on Wednesday showing consumer prices rose in June by the biggest amount since September 2005 in the aftermath of Hurricane Katrina, as gasoline prices surged.
Even when volatile food and energy costs were stripped out, consumer prices rose more than expected.
Bernanke assured lawmakers that inflation is a concern for the central bank.
"Inflation is currently too high," Bernanke said. "And it's a top priority of the Federal Reserve to run a policy that is going to bring inflation to a acceptable level consistent with price stability," he said in response to questions from the committee.
(Reporting by Mark Felsenthal; Editing by Neil Stempleman)
© Thomson Reuters 2008 All rights reserved
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