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US Central Bank Chief Says Changing Bond Prices Not Sign of Downturn


The new head of the U.S. central bank says a recent change in bond yields does not foreshadow an economic slowdown.

Federal Reserve Chairman Ben Bernanke's comment reinforced analysts' expectations that the central bank will raise interest rates.

Bernanke spoke to the Economic Club of New York Monday, and investors listened for clues about interest rate increases. He also said multiple indicators - including bond yields, spending and production - must be consulted when setting monetary policy.

"By not tying policy to a small set of forecast indicators, we may sacrifice some degree of simplicity, but we are less likely to be misled when a favored variable behaves in an unusual manner," said Ben Bernanke.

Analysts expect the central bank to increase the key interest rate one quarter point, to 4.75 next week, with additional increases possible in the future.

The Fed has raised rates 14 times during the past 1.5 years in a bid to fend off inflation.

Some information for this report was provided by Bloomberg.
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