Fed Chief Flags Oil Prices as Threat to US Recovery

Federal Reserve chairman Ben Bernanke told Congress in March 2011 that rising commodity costs, driven by turmoil across the Middle East, posed a real risk to the US recovery. He expected any inflationary effect to be brief, but warned that a prolonged climb in oil prices could damage both growth and overall price stability.

Libya's civil conflict had already cut the country's output, which stood near 1.6 million barrels a day before fighting broke out, to a trickle. American drivers felt the effect quickly: the AAA reported pump prices had risen an average of 21 cents a gallon in a single week.

The White House offered a steadier read. Chief economic adviser Austan Goolsbee said current price levels were not expected to seriously harm the economy, though his office was watching fuel markets closely.

The warnings came at a difficult moment for the Fed, which was running a $600 billion stimulus program already drawing criticism for potentially stoking inflation. Bernanke pledged that the central bank would monitor developments and respond if conditions deteriorated.

Historical summary. TurkishPress restated this wire report, first published in March 2011, in its own words.