Bernanke worried about dollar, toughens inflation message

WASHINGTON, June 4, 2008 (AFP) - Federal Reserve chairman Ben Bernanke signaled Tuesday that the US central bank is worried about the dollar, saying the sagging currency has led to "unwelcome" inflation pressures.



"We may see somewhat better economic conditions during the second half of 2008, reflecting the effects of monetary and fiscal stimulus, reduced drag from residential construction, further progress in the repair of financial and credit markets, and still solid demand from abroad.



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He added that the Fed sees growth "picking up further in 2009," but cautioned that "until the housing market, and particularly house prices, shows clearer signs of stabilization, growth risks will remain to the downside.

Recent increases in oil prices pose additional downside risks to growth.

" The comments on the US currency marked a major shift for Bernanke, who normally defers to the Treasury on such matters.

Speaking via satellite to a monetary conference in Barcelona, Spain, Bernanke offered a mixed assessment of US economic conditions, while highlighting concerns about inflation and the dollar.

"The challenges that our economy has faced over the past year or so have generated some downward pressure on t