Bernanke: US Inflation Modest

The head of the U.S. central bank says rising oil and food prices will probably cause only “modest” and “temporary” inflation in the United States.

U.S. Federal Reserve Chairman Ben Bernanke told a congressional committee Tuesday that raw materials like oil and wheat are just a small part of the finished products that are the bulk of purchases by Americans.

But Bernanke also said if high oil prices continue for a long time, they could eventually raise the threat of inflation.

The Fed chairman said the U.S. economy may grow as much as 4 percent this year, which is slightly faster than earlier predictions. However, he said the growth is not fast enough to cut the high 9 percent U.S. unemployment rate significantly for several years.

Bernanke says the jobless rate makes it clear that the central bank should continue with a controversial program intended to stimulate the economy with purchases of hundreds of billions of dollars worth of financial assets. The effort is designed to reduce long-term interest rates and make it easier for businesses to expand and hire new people. Critics say the program hurts the value of the dollar and could cause inflation.

Some information for this report was provided by AP, AFP and Reuters.

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