Bernanke: Growth More Subdued [View All]

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Source: AP

Bernanke: Growth More Subdued
Wednesday July 18, 10:27 am ET
By Jeannine Aversa, AP Economics Writer
Bernanke: Economic Growth Will Be Slower Due to Housing Slump

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke told Congress Wednesday that the economy has emerged from its anemic spell, but overall growth for the year will be lower than expected. Inflation remains the chief concern, he said.

Delivering a midyear Fed economic report to Capitol Hill, Bernanke struck a somewhat cautious tone. He suggested that the economy appears likely to expand "at a moderate pace" over the second half.

Still, the Fed chief told the House Financial Services Committee that growth this year will be a bit slower than the Fed projected in February. Growth should strengthen a bit next year, he said. The inflation forecast, however, wasn't changed. It calls for prices other than food and energy to edge lower.

Against this backdrop, the Fed is likely to leave interest rates where they are through the rest of this year.

For just over a year, the Federal Reserve has held a key interest rate at 5.25 percent, providing a period of stability to borrowers. Before that, the Fed had boosted rates for two years to fend off inflation.

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