Transcripts

Fed. Chairman Ben Bernanke & Oil Prices Inspire a Wall Street Rally

SUSIE GHARIB: A big rally on Wall Street today, thanks to a big slide in oil prices and encouraging words about inflation from Ben Bernanke. The Dow surged almost 200 points and the NASDAQ rose 34. Speaking in Jackson Hole, Wyoming, the Federal Reserve chairman said he believes inflation will moderate in the months ahead and into next year due to a stronger U.S. dollar and lower oil prices. But if that doesn't happen, Bernanke said the Fed is prepared to raise interest rates to achieve quote medium term price stability. Economist Cary Leahey of Decision Economics believes the current environment makes any move in interest rates very unlikely.

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS: If the Fed is truly worried about inflation, will they actually lift rates? I don't think they will until they get a sense the economy is stronger, meaning the unemployment rate is no longer rising. At the same time the financial markets, which continue to lurch from disaster to disaster, they have to feel better too and that just isn't happening yet.

GHARIB: Bernanke acknowledged those concerns, saying the year-old credit crisis is not over and has become a drag on economic growth. He also called for better regulation of the financial system to help protect the economy from the impact of market turmoil.