Recent developments in commodity prices and the dollar, combined with slow growth, should lead inflation to moderate this year and next year, says Fed chairman Ben Bernanke on Friday.
The recent decline in commodity prices and the increased stability of the dollar have been welcome trends, Bernanke told policymakers and economists at the Fed’s annual retreat in Jackson Hole. The Fed chairman stressed that the central bank was committed to price stability over the medium term and that the Fed will have to monitor inflation carefully as the outlook remains uncertain. Bernanke noted that the financial turmoil that began last August has not yet subsided “and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment.