Bernanke: Inflation won’t be like the '70s

A day after giving delivering grim economic projections and hinting at future interest rate cuts, Federal Reserve chairman Ben Bernanke said the United States is not on course for long-term inflation troubles similar to those in the 1970s. “I don’t anticipate ‘stagflation,’” said Mr. Bernanke in his second day of semiannual testimony on the economy before the House Financial Services Committee. “I don’t think we are anywhere near the situation that prevailed in the 1970s.” Even though Mr. Bernanke said inflation should moderate later this year, he stressed to Congress that one major challenge facing the Fed in turning around the economy is rising food and energy prices. The Fed chairman also said the volatility in the credit markets is a concern in terms of the economy rebounding. Yesterday, Mr. Bernanke hinted that the Fed would be ready to further slash interest rates following five cuts since September 18 when the Federal Open Markets Committee meeting meets on Jan. 18 (InvestmentNews, Feb. 27).