Houston's Rate Sheet

Bernanke believes a rate hike might be needed

In his first appearance in front of a joint session of Congress, the new Fed Chief Ben Bernanke didn't ruffle many feathers. He reiterated statements by Fed officials that rate hikes might have used in a continuing fight against inflation, but prefaced these statements with a positive economic outlook. Here's what TheStreet.com had to say about it:

Bernanke noted that inflation pressures increased through the year and got worse when hurricanes ravaged the Gulf Coast, boosting energy prices, squeezing household budgets and raising business costs. "Nevertheless, the increase in prices for personal consumption expenditures excluding food and energy, at just below 2%, remained moderate, and longer-term inflation expectations appear to
have been contained."

"The hurricanes left an imprint on aggregate economic activity as well, seen, in part, in the marked deceleration of real GDP in the fourth quarter. However, the most recent evidence -- including indicators of production, the flow of new orders to businesses, weekly data on initial claims for unemployment insurance, and the payroll employment and retail sales figures for January --suggests that the economic expansion remains on track."

The bond market was up slightly on the day. Bernanke's testimony will continue today.

posted by Vincent Biondillo @ 1:46 PM