Thursday, August 31, 2006

Fed Chairman Sees Continued Strong Productivity Growth

Thursday, August 31, 2006 2:25:08 PM - The head of the U.S. Federal Reserve said Thursday that he sees expects productivity growth to remain strong.

Speaking at a leadership conference in Greenville, South Carolina, Fed Chairman Ben Bernanke stated that he believes an argument can be made that recent strong productivity growth is likely to continue for some time.

The Fed chief reported that leading economists project roughly 2.5% productivity growth per year during the long term. In his speech, Bernanke detailed the productivity boom that began around 1995 and stated his opinion that there was no reason to rethink long-term productivity trends.

On inflation, Bernanke stated that the Fed's long-term goal is to control headline inflation, as this is what determines the value of money. However, the Fed chairman said that the central bank focuses on core inflation in the short run. This statistic excludes the impact of the volatile food and energy sectors, and eyeing the measure prevents the Fed from over-reacting to swings in the prices of these 2 sectors.


Post a Comment

<< Home