Palo Alto: US Federal Reserve chairman Ben Bernanke
said increased global economic linkages may have boosted
US inflation, but globalisation had not affected the
ability of the Federal Reserve to influence US financial
conditions.
Speaking
at the Stanford Institute for Economic Policy Research,
yesterday, Bernanke said, booming demand for energy
and commodities by China and other countries had contributed
to the surge in their prices in recent years. He said
policy makers at the Fed must increasingly analyse international
economic developments in determining monetary policy.
"When
the offsetting effects of globalisation on the prices
of manufactured imports and on energy and commodity
prices are considered together, there seems to be little
basis for concluding that globalisation overall has
significantly reduced inflation in the United States
in recent years; indeed the opposite may be true."
Bernanke
did not speak about the outlook for interest rates,
economic growth or inflation during his remarks. Nor
did he talk about declines in US stocks, which had their
worst week in four years.
"Empirical
studies also find that US monetary policy actions retain
a powerful effect on domestic stock prices," he
said, hinting at the power of policy intervention to
moderate the US stock markets
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