JACKSON, Wyo. – Federal Reserve Chairman Ben Bernanke
said Friday the financial crisis that has pounded the country — coupled with
higher inflation — is taking a toll on the economy and poses a major challenge
to Fed policymakers as they try to restore stability.
"Although we have seen improved functioning in some
markets, the financial storm that reached gale force" around this time last year
"has not yet subsided, and its effects on the broader economy are becoming
apparent in the form of softening economic activity and rising unemployment,"
Bernanke said in a speech to a high-profile economics conference here.
While Bernanke welcomed the recent drops in oil and other
commodities’ prices, and believes inflation will moderate this year and next,
the Fed chief also warned the inflation outlook remains highly uncertain.