Poll: Concern grows over inflation

At a Senate Foreign Relations Committee hearing, Geithner downplayed the risks that gas prices pose a major threat to the nation’s economic recovery or could cause a long-term spike in inflation.

“It’s important to note that there is considerable spare oil production capacity globally, and we and other major economies possess substantial strategic reserves of oil,” he said. “If necessary, those reserves could be mobilized to help mitigate the effect of a severe, sustained supply disruption.”

His views that rising oil prices will boost inflation are similar to those held by Federal Reserve Chairman Ben Bernanke, who told lawmakers this week that they would probably have a short-term effect and wouldn’t require action from the central bank. 

“Oil prices alone, with nothing else moving, would probably not be enough to make us respond,” Bernanke told a House panel on Wednesday. 

The Rasmussen poll also found that 32 percent are confident the Fed will be able to keep inflation under control and interest rates down while 64 percent aren’t confident in the Federal Reserve’s ability. 

Bernanke said again this week that he expects to hold interest rate levels near zero for an extended time, which could run through 2012 depending on the pace of the economic recovery. 

Federal Reserve Kansas City Bank President Thomas Hoenig is urging the central bank to gradually begin raising rates as the economy improves. 

Hoenig, who’s been the lone dissenter on the central bank’s interest rate policies, warned that holding down interest rates could create inflation or problems in the financial markets, especially because of the surge in commodity prices.