Market Watch from Bloomberg

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Bernanke says rate “well positioned,” watching dollar
Federal Reserve Chairman Ben Bernanke Tuesday signaled he is finished cutting interest rates for now and has
turned his attention to concerns about inflation in the world’s foreign exchange markets in the wake of the U.S.
dollar’s 16 percent decline against the Euro over the past year. Speaking to the International Monetary
Conference, Bernanke stated that, “For now, policy seems well positioned to promote moderate growth and price
stability over time. We will, of course, be watching the evolving situation closely and are prepared to act as
needed to meet our dual mandate.”
Keep this in mind . . .
• Observers called Bernanke’s statement a “strong defense of the dollar” and a sign that the Fed believes a
weaker U.S. dollar would be detrimental. Declines over the past year against the Euro and more recent oil price
surges have increased fears of inflation. These fears are one reason the Fed is not expected to pare interest
rates further at least through October.
• Bernanke called financial market conditions “strained” and reiterated that U.S. consumers face challenges from
declining home prices and stricter mortgage and other lending standards, a weaker job market and higher
energy costs. He added that economic growth will remain limited until home prices and the housing market
show clearer signs of stabilization.

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