Make us your home page
Instagram

Bernanke says inflation rate still too low

BOSTON — The Federal Reserve is prepared to take new action to boost the weak economy, Chairman Ben Bernanke said Friday, because inflation is still too low and the unemployment rate remains stubbornly high.

In comments at the Federal Reserve Bank of Boston, Bernanke laid out the foundations for a new round of unconventional efforts to strengthen growth, which analysts expect will be announced after the Fed's next policy meeting Nov. 2-3. Bernanke clearly pointed to inflation, which is running below the Fed's goals, as the prime reason for taking more steps to stimulate the economy.

The Fed's policymaking committee "is prepared to provide additional accommodation, if needed, to support the economic recovery and to return inflation over time to levels consistent with our mandate," Bernanke said.

Underscoring the low inflation rate, the Labor Department said Friday that consumer prices rose 0.1 percent in September and were unchanged when volatile food and energy were excluded. Over the past year, the consumer price index rose 1.1 percent, or 0.8 percent excluding food and energy.

Bernanke expressed concern that the feeble pace of economic recovery will not be enough to give employment the jump-start it needs.

"Growth next year seems unlikely to be much above its longer-term trend," he said, which would mean that "job creation may not exceed by much the increase in the size of the labor force, implying that the unemployment rate will decline only slowly."

Economists who study the Fed have become more confident in recent weeks that the central bank will announce plans to purchase hundreds of billions of dollars in U.S. Treasury bonds at its next meeting to try to boost growth. Bernanke's speech both confirms that possibility and spells out the rationale.

By buying Treasury bonds, the Fed could help spur the economy by lowering long-term interest rates, making it cheaper for Americans to take out a mortgage or for businesses to borrow money to build a new factory. The action could also raise the inflation rate. As more dollars begin to flood the market and consumers begin to buy more goods, the increased demand would push prices higher.

Bernanke says inflation rate still too low 10/15/10 [Last modified: Friday, October 15, 2010 9:47pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Washington Post.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Amid U.S. real estate buying binge by foreign investors, Florida remains first choice

    Real Estate

    Foreign investment in U.S. residential real estate recently skyrocketed to a new high with nearly half of all foreign sales happening in Florida, California and Texas.

    A National Association of Realtors annual survey found record volume and activity by foreign buyers of U.S. real estate. Florida had the highest foreign investment activity, followed by California and Texas. [National Association of Realtors]
  2. Trigaux: Tampa Bay health care leaders wary of getting too far ahead in disruptive times

    Business

    Are attempts to repeal Obamacare dead for the foreseeable future? Might the Affordable Care Act (ACA), now in dire limbo, be revived? Will Medicaid coverage for the most in need be gutted? Can Republicans now in charge of the White House, Senate and House ever agree to deliver a substitute health care plan that people …

    Natalia Ricabal of Lutz, 12 years old, joined other pediatric cancer patients in Washington in July to urge Congress to protect Medicaid coverage that helped patients like Ricabal fight cancer. She was diagnosed with Ewing's sarcoma in 2013 and has undergone extensive treatments at BayCare's St. Joseph's Children's Hospital in Tampa. [Courtesy of BayCare]
  3. The Iron Yard coding academy to close in St. Petersburg

    Business

    ST. PETERSBURG — The Iron Yard, a code-writing academy with a location in downtown St. Petersburg, will close for good this summer.

    Instructors (from left) Mark Dewey, Jason Perry, and Gavin Stark greet the audience at The Iron Yard, 260 1st Ave. S, in St. Petersburg during "Demo Day" Friday, Oct. 7, 2016, at The Iron Yard, which is an immersive code school that is part of a trend of trying to address the shortage of programmers.  The academy is closing this summer.  [LARA CERRI   |   Times]
  4. Florida's unemployment rate drops for fourth straight month

    Markets

    Unemployment in Florida hit a 10-year low in June, clocking in at 4.1 percent, down from 4.3 percent in May. The state added 19,400 jobs over the month, and saw growth in most industries. But there's one glaring missing piece to the economic recovery puzzle: wage growth.

    Florida's unemployment level dropped to 4.1 percent in June from 4.3 percent in May. |  [Times file photo]
  5. Is sinkhole damage sinking Tampa Bay property values?

    Real Estate

    On a scale of desirability, the house for sale on Whittner Drive in Land O' Lakes would rank fairly low. It's a short sale; it sits on an unstabilized sinkhole and it's within a few miles of two houses that collapsed into a gargantuan hole July 14.

    A gated community in Hernando's Spring Hill area, Pristine Place has long been susceptible to sinkholes with nearly a third of its houses with documented sinkhole damage by 2012. Today, however, many houses with repaired sinkhole damage are selling for more than houses without any issues. [WILL VRAGOVIC   |   Times file photo]