Bernanke Sees Little Inflation Threat

Hilsenrath, J. (2010). Bernanke sees little inflation threat: Fed chief cites broad slowdown in prices, has optimistic but cautious view of economy. Retrieved April 14, 2010 from: http://online.wsj.com/article/SB10001424052702304798204575183801662641626.html?mod=WSJ_article_MoreIn

This article, published on the wall Street Journal’s web site, describes Fed Chairman, Ben Bernanke’s testimony to Congress today, where he indicated there is little threat of inflation in the near term. The Chairman states that there has been a widely dispersed slowdown in inflation in the past few months and he saw little indication that the pace would be picking up soon. This should lead to short-term rates staying where they are for awhile, which will contribute to more growth in the economy. The author states that Bernanke’s assessment of the economy is optimistic but cautious because of the continued housing crisis and the poor fiscal condition of state and local governments. Some economists do not believe inflation is slowing very much and further believe that the housing market is putting downward pressure or rents, skewing the inflation numbers. Most economists do not expect deflation, but if inflation gets even lower, inflation-adjusted rates increase, which could slow or stop the recovery. As stated in the previous annotation, it is important for managers to understate as much about the workings of the economy as possible because each economic indicator can tell a manager a lot about where the economy is heading, and thereby telling the manager what he or she needs to do to prepare their firm for the changes.