Page last updated at 18:36 GMT, Tuesday, 3 June 2008 19:36 UK

Fed hints at no more US rate cuts

Ben Bernanke
Analysts say Mr Bernanke may be preparing to change policy

The head of the US Federal Reserve, Ben Bernanke, has signalled that concerns about inflation and a recovery of the economy make more rate cuts unlikely.

A series of significant rate cuts and the government's stimulus package should mean "somewhat better economic conditions", Mr Bernanke said.

His comments sent light, sweet crude $3 lower while the dollar rose to close to a three-month high.

Analysts suggest low US interest rates have contributed to rising oil prices.

'Inflation expectations'

Mr Bernanke also said that the Fed would be monitoring the weakening dollar, which could have an inflationary effect.

The weakening of the US currency against other currencies can increase demand from foreign investors for goods such as oil, as they are priced in dollars.

"We are attentive to the implications of the changes in the value of the dollar for inflation and inflation expectations," said Mr Bernanke, speaking via satellite to a monetary conference in Barcelona.

Analysts suggest these comments could signal a shift in Fed policy, as it is unusual for the central bank to speak on currency matters.

"By emphasising the dollar, a role previously assigned to the Treasury secretary, [Mr Bernanke] seems to have injected a new policy constraint that may increase in importance as a determinant of future interest rate changes," said Bill Gross, chief investment officer at Pacific Investment Management.

US light, sweet crude slipped to $124.76, its lowest level for two weeks.

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Sign in

BBC navigation

Copyright © 2017 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific