Speaking at the Economic Club of New York, Federal Reserve Chairman Ben Bernanke said that, despite the falling value of the dollar, the U.S. central bank is likely to keep interest rates exceptionally low for an “extended period,” reiterating the same statement the Fed made back in December when short-term interest rates were originally cut close to zero. While the decline in the dollar has helped steer commodity prices higher, increasing the risk of inflation, Bernanke insisted that the Fed expects inflation to “remain subdued for some time.” There are also concerns that raising rates to prop up the dollar may hinder economic recovery.

The combo of low-interest rates and a weak dollar bode well for the real estate market in New York, however, attracting buyers both local and foreign. The dollar has fallen 16 percent since March when investors went looking for safer vehicles. Bernanke said, “These safe haven flows have abated, and the dollar has accordingly retraced its gains.”

He added that the Fed is open to changing its policy to respond to significant changes in economic conditions, but that the country’s main challenges now are tight bank credit and high unemployment. In addition, he added that while recent evidence of an economic recovery may be attributable to the government stimulus, “continued growth next year is likely.”

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