By Mark Felsenthal
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke looks set to tell Congress this week that the U.S. economy is sound, but that the central bank is still concerned that inflation, while moderating, may not fu"" >
By Mark Felsenthal
WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke looks set to tell Congress this week that the U.S. economy is sound, but that the central bank is still concerned that inflation, while moderating, may not fully come to heel.
In two days of testimony on the Fed's semiannual monetary policy report on Wednesday and Thursday, Bernanke can boast that the central bank's interest-rate strategy appears to have put the economy on track for a ""soft landing"" in which growth slows just enough to keep inflation at bay.
At the same time, he will caution lawmakers -- and financial markets -- that a low-inflation outcome is not yet assured, and that the central bank stands ready to raise benchmark interest rates above their current 5.25 percent level to squelch bubbling price pressures if necessary.
The Fed has held overnight borrowing costs steady since June, when it put in place the last of 17 straight rate increases.
After their last meeting on January 30-31, Bernanke and his colleagues indicated concern that a tight labor market might make it difficult to bring inflation down. The U.S. jobless rate stood at a historically low 4.6 percent in January.
""With the low unemployment rate, he remains concerned that core inflation might pick up again after having slowed a bit recently,"" said Maury Harris, chief U.S. economist for UBS in New York.
'UPBEAT ASSESSMENT' Continued...
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