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Fed official sees 2005 economy to grow 4%
2005-03-09 00:24:49 XinhuaEnglish

WASHINGTON, March 8(Xinhuanet)-- The US economy is likely to grow at 3.75 percent to 4 percent this year and inflation will remain tame enough to keep the Federal Reserve on its"measured" path of rate hikes, Fed Governor Ben Bernanke said Tuesday.

"Economic activity appears to be off to a solid start in 2005,"Bernanke said at a Finance Committee luncheon of the Executives Club of Chicago.

"The data surprises in recent months have tended toward the upside, and real Gross Domestic Product growth in the vicinity of 3.75 to four percent looks attainable this year despite the ongoing reduction in monetary and fiscal stimulus," he said.

About the labor market, he said that despite the growth in employment, the unemployment rate should decline relatively slowly,as a strengthening job market attracts people back into the labor force.

As far as inflation, Bernanke said he sees the core inflation in 2005 will likely remain within 1.5 percent to 2.0 percent, enabling the Fed to maintain its gradual pace of normalization of interest rates.

"With the economy strengthening, with inflation stable, and with the federal funds rate still at a relatively low level, at this point, my expectation is that the Federal Open Market Committee will continue to remove policy accommodation in a measured way," Bernanke said.

"I look for 2005 to be a good year for the US economy," he said.

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