Federal Reserve Chairman Ben Benanke Speaks Up

According to Ben Bernanke

Elevated levels of inflation excluding food and energy may not recede as weakness in the housing sector is likely to restrain economic growth for longer than expected. Although core inflation seems likely to moderate gradually over time, the risks to this forecast remain to the upside. The adjustment in the housing sector is still ongoing, and the slowdown in residential construction now appears likely to remain a drag on economic growth for somewhat longer than previously expected. The rate of increase in housing costs, which had contributed to a rise in core inflation, seems likely to slow, although the timing of that deceleration is uncertain, However, the tight labor market has the potential to contribute to price pressures

The dollar fell, U.S. stock market futures lost ground, and Treasury bond prices got some help due to Bernanke's comments about the housing sector's drag on the economy, suggesting the Federal Reserve is likely to hold interest rates steady at 5.25%.