WASHINGTON – Federal Reserve Chairman Ben Bernanke fended off criticism that he 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," Bernanke told the House of Representatives budget committee, rejecting claims that rising prices for food and oil heralded dangerously speeding inflation.
Bernanke -- who was appointed by a Republican, then-president George W. Bush -- sparred with the committee's Republican members, who warned of the risks from pumping hundreds of billions of dollars into the economy to prop up growth and help reduce unemployment.
"My concern is that the cost of 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, as he challenged Bernanke to respond.
"We are already witnessing a sharp rise in a variety of key global commodities and basic material prices," Ryan said.
"Some producers here in the United States are starting to feel the cost pressures," he said.
Prices for common commodities like corn, wheat and cattle saw double-digit price rises in 2010.
Bernanke admitted that prices had risen for gas and other products, 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.
But he cited growth in economies like China, India and Brazil as the real cause of price rises.
"The inflation is taking place in emerging markets because that's where the growth is."
In the US, he said, "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," according to 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, but would consider pumping more money into the economy if needed.
If, he said, the economy is "still in a situation where the recovery does not seem to be established and deflation risk remains a concern, then we would have to think about additional measures."