Fed Chair Says Foreclosures Could Still Rise

Fed Chair Ben Bernanke testified before the House Financial Services Committee on Tuesday, saying that inflation is likely to decline — not rise, as many have feared.

Therefore, the Fed intends to keep lending rates near zero.Bernanke said inflation should be “lower in 2009 than during 2008 as a whole,” in part "because of the sizable amount of slack in resource utilization.”

Bernanke also discussed foreclosures, which he said probably haven’t peaked because of the rising unemployment rate.

He downplayed the unwinding of the commercial real estate market.

“It is a sector we are paying a lot of attention to,” Bernanke said, noting that commercial mortgages are a small segment of the market. “I don’t think we need to have an enormous program to stimulate improvement.”

Source: The New York Times, Louis Uchitelle (07/21/2009)