Bernanke: Gasoline Prices to Push Up Inflation ‘Temporarily’

Federal Reserve Chairman Ben Bernanke addressed rising gasoline prices, telling Congress that higher costs for consumers at the pump will create a temporary rise in inflation while reducing Americans’ purchasing power.
In his semi-annual monetary policy report to Congress, Bernanke said in a prepared statement that the Fed was expecting subdued levels of inflation beyond this year.
However, “since these projections were made, gasoline prices have moved up, primarily reflecting higher global oil prices – a development that is likely to push up inflation temporarily while reducing consumers’ purchasing power. We will continue to monitor energy markets carefully.”
But longer-term inflation forecasts, Bernanke added, “as measured by surveys and financial market indicators,” still foresee inflation remaining subdued.
Bernanke also commented on the labor and housing markets.
He painted a somewhat bleak labor picture, despite recent encouraging jobs growth data.
“Notwithstanding the better recent data, the job market remains far from normal: The unemployment rate remains elevated, long-term unemployment is still near record levels, and the number of persons working part time for economic reasons is very high,” Bernanke said.
On the housing market, Bernanke said many borrowers remain on the sidelines unable to take advantage of historically low mortgage rates and bottoming-out home prices.
“Unfortunately, many potential buyers lack the down payment and credit history required to qualify for loans; others are reluctant to buy a house now because of concerns about their income, employment prospects, and the future path of home prices,” Bernanke said.

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