Online Stock Trading | Bernanke Speaks, scares the market

Bernanke Speaks, scares the market


Filed Under Business News |

Fed Chairman Says Mind-Set of Investors and the Public Must Be Considered in Policy Changes

WASHINGTON (AP) — Taking into account the mind-sets of both the public and investors about where prices are headed is a key factor for policymakers working to tame inflation, Federal Reserve Chairman Ben Bernanke said Tuesday.

“Undoubtedly, the state of inflation expectations greatly influences actual inflation and thus the central bank’s ability to achieve price stability,” Bernanke said in a mostly academic speech to a conference of the National Bureau of Economic Research.

If investors, consumers and businesses feel confident that the Fed will keep prices stable, the Fed chief suggested, they may be less inclined to act in ways that could aggravate inflation. Bernanke also said that these groups may be less inclined in such circumstances to worry that inflation will eat away at investments and paychecks, and might feel better about longer-term financial planning.

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