1 reply to this topic

[Rogerdodger]

By Mark Felsenthal

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke is likely to tell Congress this week the central bank is more worried U.S. inflation will flare than it is that housing market turbulence will seriously damage the economy.

Bernanke looks set to emphasize that the Fed's main concern remains the risk that inflation fails to moderate as it expects when he appears before the House of Representatives' Financial Services Committee on Wednesday at 10 a.m. EDT. (1400 GMT).

He will deliver similar testimony the next day before the Senate Banking Committee. The two days of testimony are part of a twice-yearly ritual in which the Fed chairman presents the central bank's monetary policy report. The report will contain updated forecasts for growth, inflation and unemployment.

While price rises have moderated when volatile food and energy costs are stripped out, Bernanke is expected to stress that core inflation -- which dipped for the third straight month in May to 1.9 percent -- needs to drift a bit lower and stay there for a while before the Fed is satisfied.

"Fed officials believe that holding down inflation is the principal challenge over the next several years, and they are not inclined to tolerate much backsliding after the hard-won improvement in core inflation over the past 12 months," said Roger Kubarych, an economist for UniCredit/Bayerische Hypo-und Vereinsbank in New York.

San Francisco Federal Reserve Bank President Janet Yellen said on Thursday that recent core inflation readings, while "heartening," could bounce higher. The Fed's tilt toward guarding against inflation rather than bracing for economic weakness is the appropriate policy stance for now, she said.

LINK

[JAP]

He's a little late isn't he?