Interest-rate cuts likely done as prices soar, dollar weakens
Jeannine Aversa
Associated Press
Jun. 4, 2008 12:00 AM
WASHINGTON - Worried about high prices for energy, food and other things? Ben Bernanke is, too.
The Federal Reserve chairman has moved inflation up on his list of worries, suggesting more pointedly than ever that the time for cutting interest rates is over in view of soaring oil and commodity prices and a weakened dollar.
Although the country's economic growth - bruised by housing, credit and financial debacles - is still fragile, Bernanke on Tuesday expressed hope for some improvement in the second half of this year.
At the same time, he sounded a loud inflation warning. To this end, he raised his biggest public concern to date about the slide in the U.S. dollar, saying it has contributed to an "unwelcome rise" in inflation.
The Fed chief's fresh assessment, delivered via satellite to an international monetary conference in Spain, appeared to mark a subtle shift in Bernanke's views. To help brace the economy, the Fed dropped interest rates in late April to 2 percent, a nearly four-year low, continuing a rate-cutting campaign that started in September. Many economists believe the Fed will hold rates steady at its next meeting on June 24-25 and probably through much, if not all, of this year. However, some believe that inflation could flare and force the Fed to begin boosting rates later this year or next.
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