It's a balance between recession (slow growth) and inflation (high commodity prices, especially oil), but it appears as though the Fed will have to worry about growth first (another half point rate cut at the next meeting), and worry about inflation later. One tip of the hat may have been when Bernanke claimed that high oil prices doesn't necessarily trigger inflation. But also warned that inflation would make the Feds' job, "complicated". (He reminds me of the of loser, depressed characters Snuffleupagous on "Sesame Street", or Bad Luck Shleprock from "The Flintstones".)
Most notably, the Fed loser said that market conditions are worse than in July '07. And he expects housing vales to keep dropping throughout the year. Looks like more cuts and more rising of the price of gold.
Testimony
Chairman Ben S. Bernanke
Semiannual Monetary Policy Report to the Congress
Before the Committee on Financial Services, U.S. House of Representatives
February 27, 2008
The economic situation has become distinctly less favorable since the time of our July report. Strains in financial markets, which first became evident late last summer, have persisted; and pressures on bank capital and the continued poor functioning of markets for securitized credit have led to tighter credit conditions for many households and businesses. The growth of real gross domestic product (GDP) held up well through the third quarter despite the financial turmoil, but it has since slowed sharply. Labor market conditions have similarly softened, as job creation has slowed and the unemployment rate--at 4.9 percent in January--has moved up somewhat.
SEE "COMMENT" SECTION OF THIS THREAD FOR FULL TRANSCRIPT
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