Fed chief says US may avoid a big downturn

Despite the recent jump in the national unemployment rate, chances have improved that the United States will avoid a ‘‘substantial downturn,’’ Federal Reserve chairman Ben S. Bernanke said tonight.

Bernanke, speaking in Chatham at a conference sponsored by the Boston Federal Reserve Bank, said low interest rates, federal tax rebate checks, strong exports, and stabilizing financial markets should lift the economy during the rest of the year.

He warned, however, that soaring energy prices and the continued housing slump remain threats.

‘‘Although activity during the current quarter is likely to be weak,’’ he said, ‘‘the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.’’

His assessment appears to be the latest indication the Fed has turned its attention to inflation after making deep cuts in interest rates and taking extraordinary actions to keep financial and credit markets functioning, including engineering the sale of a failing Wall Street firm, Bear Stearns Cos.

Mounting inflation concerns, many economists say, will keep the Fed from cutting rates when policy makers meet later this month.

Bernanke has emphasized inflation in recent speeches, including one at Harvard University last week. Tonight, he said rapidly rising prices of oil and other commodities have kept inflation high.

He suggested the Fed will act forcefully to prevent inflation from gaining a long-term foothold.
(By Robert Gavin, Globe staff)