By SPA
Washington : U.S. Federal Reserve (Fed) Chairman Ben Bernanke told Congress on Thursday that the country is not “anywhere near” the dangerous stagflation situation the United States experienced in the 1970s.
With U.S. economic growth slowing and inflation rising, concerns have grown that the country could be headed toward the two problems of stagnant growth and rising prices known as “stagflation.”
“I don’t anticipate stagflation,” Bernanke told the Senate Banking Committee on the second day of his twice-annual briefing to lawmakers on monetary policy. “I don’t think we’re anywhere near the situation that prevailed in the 1970s.”
“I do expect inflation to come down,” Bernanke said. “If it doesn’t, we will have to react to it.”
High energy prices and rising inflation complicate the Fed’s job of trying to keep the economy growing and inflation contained, Bernanke acknowledged. Energy prices are creating “inflationary stress,” he said, and that is “complicating” the Fed’s work in terms of trying to prevent a further slowing of economic growth.
Bernanke’s main message to Congress was that that the central bank is ready to lower a key interest rte again to bolster the struggling economy.