News

US Central Bank Hints at Pause in Rate Hikes

TEXT SIZE - +

Federal Reserve Chairman Ben Bernanke told the Congressional Joint Economic Committee Thursday that economic data will be particularly important in guiding central bank decisions on interest rates.  The U.S. central bank chief said higher energy prices and a slowdown in rising house prices have created uncertainties that make forecasting more difficult.

In an effort to contain inflationary pressure, the Federal Reserve has raised short-term interest rates 15 times, or by nearly four percentage points, over a two-year period.  Bernanke, who succeeded Alan Greenspan in February, signaled financial markets that the two-year-long period of monetary tightening may be near an end.

"At some point in the future the committee may decide to take no action at one or more meetings, in the interest of allowing more time in receiving more information relevant to the outlook," he said.

The central bank meets roughly every six weeks to set interest rates.  Its next meeting is May 10.  Short-term U.S. interest rates are 4.75 percent.

While the U.S. economy has been growing at a four percent rate during the past three years, Bernanke expects growth to slow somewhat, due in large part to higher energy costs.

"One issue we will be looking at very carefully is whether the increases in energy prices we have already seen, and that we may see in the future, whether they pass through into core inflation," he added.  "In other words, do they go beyond the energy sector itself and begin to be seen in higher prices for other goods and services.   

Energy prices have more than tripled in the past three years.  And as American consumers spend more on fuel to get to and from work, they have less money left for other purchases.

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Feature Story

Christian worshippers hold crosses as they take part in a procession along Via Dolorosa on Good Friday during Holy Week in Jerusalem's Old City April 18, 2014. Christian worshippers on Friday retraced the route Jesus took along Via Dolorosa to his crucifi

Thousands Join Good Friday Procession in Jerusalem

Good Friday is the day of the crucifixion of Jesus; Easter Sunday marks his resurrection More