From Bloomberg (hat tip reader Lewis B. Sckolnick);
Responding to questions from lawmakers, Bernanke said that should the rescue succeed and spur an economic recovery, that may lead the Fed to raise interest rates sooner than it otherwise would. For the plan itself, “I don’t expect any effect on inflation,” Bernanke said.
The first trading day after details of the plan emerge, the dollar drops 3% and oil spikes up. But Bernanke has convinced himself there is no inflation risk in the Paulson plan.