labels: economy - general, trade
Globalisation may boost US inflation says US Fed chiefnews
03 March 2007

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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Globalisation may boost US inflation says US Fed chief