Bernanke Rebuffs Frank on Rate Cut; Senator Questions Inflation Concern
Correction: A headline on a Feb. 16 Business article referred to Rep. Barney Frank (D-Mass.) as a senator. (Published 2/17/2007)</br></br>Federal Reserve Chairman Ben S. Bernanke yesterday rejected a Democratic lawmaker's suggestion that he consider cutting interest rates to bolster the economy.</br></br>Bernanke, testifying for a second day on Capitol Hill, this time before the House Financial Services Committee, repeated that the Fed is likely to hold rates steady for a while if slower economic growth nudges inflation lower this year and next as expected.</br></br>But the Fed also thinks inflation is too high and might go higher, Bernanke said. If he and his colleagues adjust borrowing costs in coming months, they are more likely to raise rates than lower them.</br></br>"In order for this expansion to continue in a sustainable way, inflation needs to be well controlled," Bernanke said in response to remarks by committee Chairman Barney Frank (D-Mass.). "If inflation becomes higher for some reason, then the Federal Reserve would have to respond to that by raising interest rates."