Fed chief makes ‘strong dollar’ noises

WASHINGTON, June 3, 2008 (AFP) – Federal Reserve chairman Ben Bernanke said Tuesday the central bank is “attentive” to the sagging dollar and would look at steps “to guard against risks” to inflation from a weak currency. Bernanke, speaking via satellite to a monetary conference in Barcelona, Spain, offered a mixed assessment of US economic conditions, highlighting concerns about inflation.

“The challenges that out economy has faced over the past year or so have generated some downward pressure on the foreign exchange value of the dollar, which have contributed to the unwelcome rise in import prices and consumer price inflation,” he said, according to the text of the remarks released in Washington.

“We are attentive to the implications of the changes in the value of the dollar for inflation and inflation expectations and will continue to formulate policy to guard against risks to both parts of our dual mandate, including the risk of an erosion in longer-term inflation expectations.”

The Fed’s dual mandate is to maintain price stability and promote maximum employment in the US economy.

The comments by Bernanke were his strongest on exchange rates and the potential impact on inflation.

He noted that