http://money.cnn.com/2006/06/15/news/econo...dex.htm?cnn=yes

Fed chief says energy prices will probably stay high for a while, which could account for the recent pickup in core inflation.
June 15, 2006: 2:17 PM EDT


CHICAGO (Reuters) - Federal Reserve Chairman Ben Bernanke said Thursday U.S. inflation developments "bear watching," but the pass-through from lofty energy costs to other prices had been "relatively low."

Speaking to the Economic Club of Chicago, Bernanke said energy prices would likely stay elevated for a long time and lead U.S. consumers and business to more significantly alter their behavior.

"Although the rate of pass-through of higher energy and other commodity prices to core consumer price inflation appears to have remained relatively low in the current episode - reflecting the inflation-fighting credibility built by the Fed in recent decades - the cumulative increases in energy and commodity prices have been large enough that they could account for some of the recent pickup in core inflation," he said.

Echoing comments he made last week, the Fed chief noted that gauges of expected inflation had "edged up" in recent months. But he also said they remained within the ranges of recent years, and inflation expectations as implied by yields on government debt had "fallen back somewhat" over the past month.

"Nevertheless, these developments bear watching," he said.

Bernanke said the spillover of surging energy costs into other prices had been much reduced over the past quarter century as the Fed and other central banks labored hard to bring inflation and inflation expectations down.

"To the extent that households and business owners expect that the Fed will keep inflation low, firms have both less incentive and less ability to pass on increased energy costs in the form of higher prices, and likewise workers have less incentive to demand compensating increases in their nominal wages," he said.

Tough talk on prices from Bernanke and other officials have helped cement expectations that the U.S. central bank will bump benchmark overnight interest rates up by a quarter-percentage point to 5.25 percent at a meeting on June 28-29.

Analysts have said the Fed's effort appears aimed at keeping inflation expectations anchored and preventing a self-feeding inflationary psychology from taking root.

diversify and this is less of a potential problem.

Diversification is fine but there will come a point in time where higher cost's will have to be passed on both at the wholesale and retail levels. And that won't be pleasant.

and CDs will earn higher interests.

I am more concerned about the erosion of savings. that is why I own several international funds.

My international fund hasn't done well either, so far this year it's a net loss.
If you don't mind, which do you have, and how have they been doing?

as I've said elsewhere, while I do adjust holdings annually, I am more concerned about valuation in 20 years than in the past 6 months.

but I have TEMFX, TRIEX, and TRERX in my retirement vehicles and MACSX outside of retirement vehicles.

I really like all the Matthews Funds. Now that some air has been let out of Asian equities I am considering getting into another one of their funds.

I've also been considering FLATX and/or FNORX.

ETA: my spouse has PITSX.