Federal Reserve Chairman Ben Bernanke is optimistic about inflation and won't raise interest rates any time soon. His comments sparked a stock rally, but is Bernanke's view on inflation realistic?
ALEX CHADWICK, host: From the studios of NPR West, this is Day to Day. I'm Alex Chadwick.</s>ALEX COHEN, host: And I'm Alex Cohen.  Will Hillary Clinton supporters give women a bad name at the Democratic Convention?  More on that in a moment.</s>ALEX CHADWICK, host: First, these men speak and the markets listen.  Comments from two of the most powerful players in the financial world who sends stocks higher - a welcome change of pace on Wall Street these days.  The men we're talking about are Ben Bernanke, Chairman of the Federal Reserve, and billionaire super-investor, financier oracle and all-around wise man Warren Buffet.  We're joined now by NPR's own oracle of economic news, John Ydstie.  John, welcome back.</s>JOHN YDSTIE: Hi, Alex.  Thanks.</s>ALEX CHADWICK, host: So, let's start with Chairman Bernanke who is speaking at a Federal Reserve conference in Jackson, Wyoming.  What did he have to say?</s>JOHN YDSTIE: Well, I think his most important remarks on the current state of the economy had to do with inflation, which, as you know over the past 12 months, has reached a 17-year high.  And he said that inflation - the outlook for inflation remains highly uncertain, but he suggested that there were some hopeful signs in recent declines in the prices of oil and other commodities, which have been the main drivers of inflation.  If that continues, it's very good news because the Fed is facing two big threats, high inflation and very slow growth.  And if inflation is subsiding, it will allow the Fed to keep interest rates low and fight that other problem, slow growth.</s>ALEX CHADWICK, host: What about the general state of the economy and financial crisis in most people's view, I think?  Did he say how long this is going to continue?</s>JOHN YDSTIE: Well, he said there - what he called the financial storm had not yet subsided.  But he also said we're no longer facing what you call the gale force winds that began blowing about a year ago.  Those winds, of course, blew over the investment bank Bear Stearns, and Bernanke again defended the Fed's putting taxpayer money at risk in its rescue, saying that the toll on the broader economy would have been too great if the Fed hadn't acted.  The Fed chairman did not mention the government's effort to prop up Fannie Mae and Freddie Mac, which again have been taking a beating in the stock market this week.  Investors just seemed convinced that they'll eventually be taken over by the government and stockholders will be left with nothing, and given their share prices in the market right now, they've got almost nothing.</s>ALEX CHADWICK, host: So the other financial heavyweight we mentioned earlier, investor Warren Buffet, he was also talking about Freddie and Fannie today.</s>JOHN YDSTIE: Right.  Buffet was a big shareholder in Freddie Mac until 2001 when he became disenchanted because he thought they were taking too many risks.  And he said today that he thought time had been running out for Freddie and Fannie, and they wouldn't have survived if the government hadn't stepped in a couple of weeks ago.  He also said that he had no big bets against the dollar, which may have helped the dollar strengthen in markets today after losing ground during the rest of this week.  Buffet also said he thought U.S. stocks were valued better than they have been any time this year, and that helped to drive a rally in the stock market earlier today.</s>ALEX CHADWICK, host: John Ydstie, financial news roundup from Washington.  John, thank you.</s>JOHN YDSTIE: You're welcome, Alex.