Bernanke: surging commodity prices won't affect inflation yet

U.S. Federal Reserve Chairman Ben Bernanke has publicly stated that fast-rising commodity prices will not accelerate the pace of U.S. inflation, and many investors are betting with the Fed's chief policymaker.U.S. Federal Reserve Chairman Ben Bernanke has publicly stated that fast-rising commodity prices will not accelerate the pace of U.S. inflation, and many investors are betting with the Fed's chief policymaker.

The projections by analysts are done in increments of long-term price expectations; these include, for example, the difference between 10-year nominal and inflation-indexed Treasury bonds, which dropped 2.36 percentage points from February 4 from 2.41 points January 5, Bloomberg reports.The projections by analysts are done in increments of long-term price expectations; these include, for example, the difference between 10-year nominal and inflation-indexed Treasury bonds, which dropped 2.36 percentage points from February 4 from 2.41 points January 5, Bloomberg reports.

Though the effects of high commodity costs could spike later this year, many analysts contend that commodity costs could reach a warning threshold of around 2.75 points, it will be difficult for the spread to remain at those levels without significant growth in the U.S. labor market, Anthony Crescenzi, an executive vice president at Pacific Investment Management, affirmed to Bloomberg. Though the effects of high commodity costs could spike later this year, many analysts contend that commodity costs could reach a warning threshold of around 2.75 points, it will be difficult for the spread to remain at those levels without significant growth in the U.S. labor market, Anthony Crescenzi, an executive vice president at Pacific Investment Management, affirmed to Bloomberg.

As a result, the Fed will most likely keep its benchmark interest rates around zero throughout 2011 because of higher commodity prices, Crescenzi projects. "Headline inflation is beginning to have a greater influence on monetary policy, but not yet at the Fed," he asserted. As a result, the Fed will most likely keep its benchmark interest rates around zero throughout 2011 because of higher commodity prices, Crescenzi projects. "Headline inflation is beginning to have a greater influence on monetary policy, but not yet at the Fed," he asserted.

Bob Doll, the chief equity strategist for fundamental equities at BlackRock, concluded in a report that the Fed "appears to be awaiting economic growth that is stronger than 3.5 percent, a more significant decline in unemployment and rising expectations for inflation." Bob Doll, the chief equity strategist for fundamental equities at BlackRock, concluded in a report that the Fed "appears to be awaiting economic growth that is stronger than 3.5 percent, a more significant decline in unemployment and rising expectations for inflation."