Fed must be vigilant even as economy slows: Bernanke
Mon Jun 5, 2006 02:51 PM ET
http://go.reuters.com/newsArticle.jhtml?type=businessNews&storyID=12429503&src=rss/businessNewsWASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Monday the Fed needed to be vigilant to make sure inflation stays under control even as the economy starts to shift to a slower pace of growth.
"It is reasonably clear that the U.S. economy is entering a period of transition," Bernanke told a group of bankers. "The anticipated moderation of economic growth seems now to be under way."
Despite forecasts of easing growth, the U.S. central bankchief expressed concern over core inflation, saying the pace of increase in non-food, non-energy prices measured over both the past three and past six months was at levels that "if sustained" would be at or above the upper end of the range he views as consistent with price stability.
"These are unwelcome developments," Bernanke said.:eyes:
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With the economy now evidently in a period of transition, monetary policy must be conducted with great care and with close attention to the evolution of the economic outlook as implied by incoming information," he said. "Given recent developments, the medium-term outlook for inflation will receive particular scrutiny."