Risks to the economy "remain to the downside" despite inflationary pressures, Federal Reserve Chairman Ben S. Bernanke said Wednesday in a semiannual report to Congress that was widely interpreted as indicating monetary officials may cut rates again. "The risks include the possibilities that the housing market or labor market may deteriorate more than is currently anticipated and that credit conditions may tighten substantially further," he said. Mr. Bernanke also indicated that the Fed is carefully eyeing the risks posed by the dangerous combination of increased inflation and economic weakness in its monetary policy considerations.
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