Bernanke sees higher inflation as 'transitory' (by Sarah Turner)

SYDNEY (MarketWatch) -- U.S. Federal Reserve Chairman Ben Bernanke said late Monday that commodity prices are being driven primarily by global supply and demand. "Those prices are affecting the overall price indexes of the United States," he said. Bernanke added, however, that as long as inflation expectations remain stable and well anchored, "which in my view remains the case," and as long as commodity-price increases eventually stabilize, then this will not be reflected in a standard increase in inflation. "I think the increase will be transitory, that it will pass, and we will go back to a level of inflation that is consistent with our price stability mandate," he said. Still, he said that, if inflation assumptions prove to be incorrect, "then we would certainly have to respond to that to ensure that we maintain price stability in the United States."