The risk of deflation, a damaging downward spiral of falling prices and lower wages, has declined in recent months, Federal Reserve Chairman Ben Bernanke said on Thursday.
He credited the U.S. central bank's aggressive efforts to ease monetary policy through purchases of government bonds for the improving outlook, and said the recent rise in Treasury bond yields reflects improved economic prospects.
Interest rates are higher, but I think that's mostly because the news is better. So I think the policy has helped, Bernanke said at an event sponsored by the Federal Deposit Insurance Corp.
We're seeing some improvement in the labor market. I think deflation risk has receded considerably and so we're moving in the right direction, he added.