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The Fed Expects Economy to Accelerate in 2008
The U.S. economy will continue to expand at the moderate pace this year and gain some momentum only in 2008, U.S. Federal Reserve Chairman Ben Bernanke forecasted when delivering the Fed’s semiannual report to the Congress yesterday.
“Overall, the U.S. economy appears likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy's underlying trend," Bernanke said as quoted by Reuters.
The bad news is that the Fed expects the slump on the housing market to continue longer than anticipated and the further growth in energy/raw prices to fuel consumer prices and core inflation, which excludes food and energy costs.
Even though Bernanke hailed the recent moderation in core inflation, he emphasized that it could be just temporarily. He also stressed that, in the environment of rather high loading of facilities and moderate decline in inflation pressure, the risks of price growth are the main concern of the Fed.
www.kommersant.com
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