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January 09, 2007

Bernanke speaks

When the head of the Federal Reserve speaks, everyone interested in the economy listens. N.C. State University economist Mike Walden outlines some of the main points Fed Chairman Ben Bernanke has been making recently.

"First of all," says Dr. Walden, "he is upbeat about the economy. So rather than seeing the economic glass half empty, I think he sees it half full. He is looking ahead to the economy in 2007, and he has stated that he sees the economy growing modestly in 2007 and in fact in the years beyond.

"He also doesn’t think the housing slump will push the economy into a recession. In fact he has said he thinks the housing slump will likely end in 2007," Walden adds. "Now, he does remain concerned about inflation, but he has stated he does see signs that inflation is moderating.

"So all this is very important," Walden concludes, "because this may give us some indication of where Mr. Bernanke may take us regarding interest rates, although he’s always careful not to tip his hand on interest rate policy."

Posted by deeshore at January 9, 2007 10:28 AM