WASHINGTON: Federal Reserve Chairman Ben Bernanke fended off criticism that the central bank is ignoring the risk of rising prices Wednesday, as he faced a skeptical Republican-controlled panel in Congress.
"We remain unwaveringly committed to price stability," he told the House of Representatives budget committee, amid warnings about rising prices for food and oil.
As the Fed has pumped hundreds of billions of dollars into the economy to prop up growth and help reduce inflation, policy hawks and those on the right of the political spectrum have warned the Fed is gambling with the country's future.
"My concern is that the cost the Fed's current monetary policy... will come to outweigh the perceived benefits," said newly installed committee chairman, Republican Paul Ryan.
Flexing his newly found political muscle, Ryan said there were already-emerging price pressures and potential economic bubbles, challenging Bernanke to respond.
"Some producers here in the United States are starting to feel the cost pressures," he said.
"We are already witnessing a sharp rise in a variety of key global commodities and basic material prices."
Bernanke admitted that prices had risen for some commonly-bought products, like gas. But, he said, over-all inflation remained low and unemployment was still unacceptably high.
"We have recently seen increases in some highly visible prices," Bernanke said citing growth in emerging markets as the real cause of price rises.
"Overall inflation is still quite low and longer-term inflation expectations have remained stable."
Bernanke's policies have put the Fed squarely in the middle of Washington's bitter partisan politics, a position that the bank normally works hard to avoid.
While Republicans have urged the Fed to tighten monetary policy -- and stave off the risk of inflation -- Democrats have pressed for a continuation of current policies until the unemployment rate comes down.
"Millions of Americans are still out of work and the unemployment rate -- while coming down -- remains stubbornly high," said the committee's ranking Democrat, Chris Van Hollen.
"We must use all the tools at our disposal to help businesses put people back to work."
Bernanke indicated the Fed would continue its current policies, but did have the tools to reverse course if needed.
"We are confident that we have the tools to be able to smoothly and effectively exit from the current highly accommodative policy stance at the appropriate time," Bernanke said.
Bernanke said the Fed would be "exceptionally vigilant," about rising prices.
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