Federal Reserve Chairman Ben Bernanke has the market guessing about whether interest rates will be increased this year. His comments this morning about increasing the duration of emergency lending to investment banks reduces the chance that borrowing costs will rise. Take a look at the recent comments from Fed and ECB officials:

US Fed: Down Playing an Interest Rate Hike?

Ben Bernanke, Federal Reserve Chairman (Voting Member)

"The Federal Reserve is strongly committed'' to financial stability and is ``considering several options, including extending the duration of our facilities for primary dealers beyond year-end,''

"We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end, should the current unusual and exigent circumstances continue to prevail in dealer funding markets," Bernanke said. – July 8, 2008

Janet Yellen, San Francisco Fed President (Non-Voting Member)

"Things could get worse before they get better," “The unemployment rate could increase”

"The risks to inflation are likely not symmetric and they have definitely increased. We cannot and will not allow a wage-price spiral to develop," – July 7, 2008

Henry Paulson, US Treasury Secretary

There is a strong possibility that we will be growing at the end of the year - that we will have stronger growth at the end of the year than we have now."

"Our biggest concern is the downturn.”

“There's no doubt that high headline inflation numbers are a real concern to Americans, but core inflation is relatively contained and my biggest focus today is on the downside risks, which are housing, oil prices, and what is going on in the capital markets." – July 3, 2008

Federic Mishkin, Fed Governor (Voting Member)

"Growth could continue to be quite weak, though I would hope it would pick up next year," - July 2, 2008

ECB: Respect the Words “No Bias”

Gertrude Tumpel-Gugerell, ECB Board Member

This (no bias) is a shared feeling within the Governing Council." – July 8, 2008

Yves Mersch, ECB Governing Council

‘We are sending a signal today which shows that we are determined to act against home-made inflation.’ – July 4, 2008

Klaus Liebscher, ECB Council Member

"I cannot rule out a transitory further rise in the inflation rate, the extent of which is open…But I stick to the scenario that during 2009 inflation will moderate, although will still be above our definition of price stability."– July 4, 2008

Jean-Claude Trichet, European Central Bank President

"This (no bias) is a shared feeling within the Governin‘Against the present background and on the basis of our present assessment, we believe that the monetary policy stance after today’s decision will contribute to achieving our objective of price stability. Starting from here, I have no bias. You are aware of our constant position, which is fully part of our monetary policy handling. We make no pre-commitment on the medium term and we do always what is necessary to deliver price stability in line with our definition in the medium term. I insist on both “the medium term” and “in line with our definition”. And we do what is necessary to be credible in this delivery in order to solidly anchor inflation expectations in line with our definition.’

‘First of all, at the mid-point of this year, we do not have a rate of growth that is flattering. That is clear and I warn you in advance that the second quarter will be very different from the first quarter. The two quarters must be taken into account together, because we clearly had a very flattering first quarter, which will certainly not be mirrored in the second quarter. And I can say that the third quarter will probably not be particularly flattering either. That being said, the information we have at our disposal permits the Governing Council to trust that its assessment of moderate ongoing growth is appropriate at the time of speaking. But I also told you that the risks were on the downside.’ – July 3, 2008

BoE: Inflation Should Ease on its Own

Charles Bean, Bank of England Chief Economist

A "more persistent'' or "more pronounced'' slowdown may lead ``inflation to undershoot the target in the medium term.''

"The pickup in inflation should be temporary provided pay growth doesn't try to compensate for the overall pickup in inflation,'' Bean told the committee today. – July 2, 2008

Richard Lee is a Currency Strategist at FXCM.