Fed Chairman Bernanke: Frequently Asked Questions

Fed Chairman Bernanke: Frequently Asked Questions

From Fed Chairman Ben Bernanke: . Dr. Bernanke discusses four questions: 1. Where is the economy headed? 2. What has the Federal Reserve been doing to support the economy and the financial system? 3. Will the Federal Reserve's actions lead to higher inflation down the road? 4. How can we avoid a similar crisis in the future?

On inflation, Bernanke says he expects "inflation to remain subdued for some time."
On the economy: Where Is the Economy Headed? ... Recently we have seen some pickup in economic activity, reflecting, in part, the waning of some forces that had been restraining the economy during the preceding several quarters .

The collapse of final demand that accelerated in the latter part of 2008 left many firms with excessive inventories of unsold goods, which in turn led them to cut production and employment aggressively. This phenomenon was especially evident in the motor vehicle industry, where automakers, a number of whom were facing severe financial pressures, temporarily suspended production at many plants.

By the middle of this year, however, inventories had been sufficiently reduced to encourage firms in a wide range of industries to begin increasing output...