Fed Chief Warns on 4Q Slowdown

Federal Reserve Chairman Ben Bernanke said the U.S. economy is likely to “slow noticeably” this quarter while high commodity prices and a weaker dollar may stoke inflation “for a time,” Bloomberg News reported Thursday.

Bernanke said the Federal Open Market Committee, which sets the benchmark U.S. interest rate, saw risks to both growth and prices at its Oct. 31 meeting, when officials reduced the rate by a quarter-point to 4.5%. He added the Fed “will be very dependent on the data” and “will respond as needed” to keep growth and inflation stable, according to Bloomberg.
 
“The committee expected that the growth of economic activity would slow noticeably in the fourth quarter,” Bernanke said in testimony to the congressional Joint Economic Committee. While the FOMC anticipated growth to improve later next year, “the committee also saw down-side risks to this projection” if the housing slump spilled into spending, he said.

The hearing was Bernanke’s first full hearing on the economic outlook since July, Bloomberg said.