Bernanke Testimony Hits Familiar Themes, Recent Higher Commodity Prices Will Cause Temporary Impact on Inflation

Bernanke went before the Senate Banking Committee for his semiannual report on monetary policy. His testimony stuck to the message the Fed has had during the past few months – while the economy is growing and growth may pick up – the Fed will keep rates at their ultra low levels until there is a “sustained period of stronger job growth.”

We talked about this point in our article – Fundamental Factors Affecting the USD This Week.

On the topic of inflation Bernanke said that higher commodity prices would not cause a permanent increase in inflation, and because of the current state of the labor market the increase in oil and other commodities will mean “at most, a temporary and relatively modest increase in US consumer price inflation.”

In other words, nothing has changed from their side in terms of policy. The Fed looks set to continue to completion its $600 billion program of buying longer-term Treasuries. The program is set to go through June.

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