U.S. inflation is set to stabilize in the remainder of this year, a top U.S. Federal Reserve official said on Monday, adding there was concern it should not rise from current levels. "Inflation has picked up a bit and so now obviously there is concern ... to make sure that inflation doesn't rise," Federal Reserve Board Governor Ben Bernanke. "I believe that the most likely scenario is that core inflation ... will stabilize in the remainder of the year in a region with which I am comfortable," he said at a conference hosted by the European Economics and Financial Centre in Paris. Bernanke spoke ahead of a U.S. Federal Reserve policy meeting on June 29-30, from which economists widely expect the Fed to start raising interest rates gradually. The Fed has held overnight borrowing costs at a 1958 low of 1 percent since last June. "We're trying to find the right balance that will bring ... us to a steady growth path with low inflation, and I should say that I'm fairly optimistic we'll be able to do that," Bernanke said.
"Of course ... if inflation is higher than anticipated, we'll have obviously to respond to that." Bernanke also said that the U.S. economy was currently in a period of strong growth. "Now we have a growing economy, one in which I think there still is output slack even if it's beginning to close." Bernanke also repeated his view that setting a specific goal for inflation could help the U.S. Federal Reserve better communicate its policy. "The Fed could improve its communication by having a quantitative inflation objective," he said. Asked what inflation range he would like to target, he replied: "Somewhere from one to two (percent) would be my general range." The U.S. consumer price index rose 0.6 percent last month, the Labor Department said last week, surpassing forecasts of a 0.4 percent rise. But the core CPI, which is more closely watched for inflation trends, rose by just 0.2 percent. That helped pull down the year-over-year inflation rate to 1.7 percent from 1.8 percent in April, although it was up from January's 1.1 percent.///