 Inflation remains a key issue for Fed Reserve boss Ben Bernanke |
US economic growth should slow to a more sustainable pace this year, but high energy prices still threaten inflation, the US Fed chief has said. Speaking to Congress' Joint Economic Committee, Federal Reserve chairman Ben Bernanke said this could make interest rate decisions less predictable.
Rates have risen for 15 months in a row as the Fed has sought to tighten the credit supply and cut inflation risks.
In future it could pause to examine the relevant economic data, he said.
Major improvement
But Mr Bernanke warned that, if the Fed did decide to take no action on rates one month, it would "not hesitate to act" at subsequent meetings in order to keep the economy moving and inflation at bay.
US economists took Mr Bernanke's remarks to indicate an imminent pause in interest rate rises, the last of which left the key interest rate at 4.75%.
"The headline that stands out is the possible pause in the rate hikes that we've been experiencing for the past two years," said Kevin Logan, a senior economist at Dresdner Kleinwort Wasserstein in New York.
"This sits with our view that they would go to 5% and then wait for the incoming data."
Mr Bernanke gave a positive assessment of the economy and said that it grew at an annualised rate of 4-5% between January and March, a major improvement from the 1.7% growth seen in the final quarter of 2005.
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