Bernanke raises hopes of pause in interest-rate hikes

Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee today that a slowdown in the economy that would keep inflation in check seems to be underway, raising hopes on Wall Street that the Fed will keep short-term interest rates at 5.25 percent. Bernanke's delivered his Semiannual Monetary Policy Report to Congress on the same day the June consumer price index report was released, showing a 0.3 percent increase in the core inflation rate. Despite evidence that prices continue to rise, Bernanke said the Fed must be forward-looking and take into account the possible future effects of previous interest-rate hikes. Although the core inflation rate -- which excludes food and energy prices -- is running at 2.6 percent so far this year, Bernanke predicted it will be 2.25 percent to 2.5 percent for the year, and 2 percent to 2.25 percent in 2007. Bernanke's testimony -- which left open the possibility of a pause in interest-rate increases -- sent stocks and bonds up in midda...