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COPYRIGHT 2006 Voxant, Inc.
Original Source: NIGHTLY BUSINESS REPORT
PAUL KANGAS, NIGHTLY BUSINESS REPORT ANCHOR: Concerns about core inflation today from Federal Reserve Chairman Ben Bernanke in his first remarks on the economy in months. Bernanke says price pressures must come down, but what he doesn`t say is that interest rates will come down as well. We`ll have details and analysis of his speech.
SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: The financial markets are getting a new top cop. A deal is in the works to get rid of overlapping layers of regulation among the nation`s major stock exchanges. The move could save millions of dollars a year and improve oversight.
KANGAS: Aircraft maker Boeing is on a roll. Its shares head higher on news of yet another big new order for the airplane maker. This time, the buyer is an airline in Europe. Last week, it was an airline in Asia.
GHARIB: Also tonight, harnessing the energy of the wind and the sun. We look at prospects for alternative energy, as we begin a special series of reports called "Power Struggle."
KANGAS: I`m Paul Kangas.
GHARIB: And I`m Susie Gharib. This is NIGHTLY BUSINESS REPORT for Tuesday, November 28.
Good evening, everyone, an inflation warning today from the chairman of the Federal Reserve. Speaking in New York to the National Italian American Foundation, Ben Bernanke said the economy is in good shape, but he`s concerned about the current level of core inflation. His comments dashed hopes on Wall Street that the Fed might cut rates early next year. Erika Miller reports.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fed Chairman Ben Bernanke got a standing ovation from the audience today, but not from Wall Street. Stock investors were disappointed the Fed chairman did not signal the possibility of an interest rate cut in the near future. Twice in his prepared remarks, Bernanke repeated this warning about inflation.
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The level of core inflation remains uncomfortably high.
MILLER: That sparked concerns the next move by the Fed might actually be a rate hike.
JAMES AWAD, PORTFOLIO MANAGER, AWAD ASSET MANAGEMENT: He was implying that maybe you`re going to get rate increases and certainly he said nothing to encourage those who were betting on rate cuts.
MILLER: But the news wasn`t all bad. Bernanke gave an upbeat assessment of the overall economy, despite a slowdown in the housing and auto sectors.
BERNANKE: Over the next year or so, the economy appears likely to expand at a moderate rate, close to or modestly below the economy`s long run sustainable pace.
MILLER: The Federal Reserve`s open market committee will meet December 12, and nearly everyone agrees the central bank is likely to hold rates steady as it did the last three meetings. The bigger debate is which way the Fed will move next year. Even after Bernanke`s speech today, the bond market is pricing in nearly 50 percent odds of a rate cut in the first quarter. But many economists think the next move will be a rate hike.
ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS: I think they might be on hold for another three months perhaps. I think we could see rates going up end of February, March, in that period of time, because I think by that time, the economy will have more clearly recovered.
MILLER: There were several other issues Bernanke did not address in his speech today. He did not mention recent weakness in the dollar or his planned trip to China next month with Treasury Secretary Henry Paulson.
This is Fed Chairman Ben Bernanke`s last planned economic speech before the Fed`s December meeting. As a result, experts say his next major economic assessment is likely to come in...
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