Bernanke to push for added monetary stimulus if needed

Federal Reserve chairman Ben S Bernanke signalled he would push for added monetary stimulus if needed, resisting pressure from Republicans concerned that he was fanning inflation.

According to Bernanke in his testimony to Congress's joint economic committee, the Fed is ''prepared to take further action as appropriate'' after it resorted to unconventional tools to boost growth in August and September. He rejected the comments of senators Jim DeMint of South Carolina and Mike Lee of Utah that record central bank stimulus had led to inflation and the money supply out of control.

According to representative Mick Mulvaney, the Fed chief could legitimately push ahead with added stimulus so long as he reined in price increases.

The Fed's preferred price index, the personal consumption expenditures index, excluding food and fuel, was up1.6 per cent in August as against a year earlier and up from 1 per cent in March. The index including all prices was up 2.9 per cent in August, as against 2 per cent in March.

According to Bernanke, price increases ''have begun to moderate'' after a rise in oil costs earlier this year pushed  prices for gasoline and food higher. He said faster inflation this year ''does not appear to have become ingrained in the economy,'' citing a recent decline in what traders expect for inflation.

A measure of inflation expectations for five to 10 years, based on a 2008 Fed research paper, fell to 2.16 per cent on 30 September, the most recent date available, as against 2.79 per cent at the end of August.