US inflation set to rise, then moderate: Fed

US Fed Chairman Ben Bernanke mostly reiterated his concerns about growth and inflation during his testimony before the Senate Banking Committee. Bernanke noted significant risks to downside growth, and "intensified" inflation risks.

Bernanke said, “Growth is projected to take up gradually over the next two years as residential construction bottoms out and begins slow recovery and as credit conditioned gradually improve. However, FOMC participants indicated that considerable uncertainty surrounding their outlook for economic growth and they view that risks they forecast as skewed to the downside.” He added, “The effects of the housing contraction and the financial headwinds on spending in economic activity have been compounded by rapid increases in prices of energy and other commodities which have sapped household purchasing power even as they have boosted inflation. Against this backdrop, economic activity has advanced at a sluggish pace during the first half of this year, while inflation has remained elevated.”