During a question-and-answer session with members of the House Budget Committee, who grilled him about rising food and gas prices, Federal Reserve chairman said the risk of inflation was “quite low” and that higher prices in emerging markets were unlikely to spill over into the U.S.

Bernanke contended with aggressive questions from members of his own Republican Party who implied that the fed chief’s stimulus measures have exacerbated inflation worries.

House Budget Committee Chairman Paul Ryan, a Republican of Wisconsin, said he was worried the Fed will not be able to detect inflation until the cow is out of the barn and that inflation has already started to seep through the economy.

Conceding that inflation is accelerating in the emerging markets,

Bernanke blamed higher prices on vibrant demand from such rapidly-growing countries like China, rather than Fed policies which were designed to stimulate the economy.

“Monetary policy can't do anything about, say, for example, bad weather in Russia, Bernanke quipped.
However, Ryan replied that certain Fed measures, like the program including buying $600 billion worth of Treasury, might inflame inflation or prompt speculation in other assets.

Many of us fear monetary policy is on a difficult track, Ryan said.

Bernanke said the bond-buying scheme was necessary to ease joblessness, claiming that the Fed’s stimulus policies have saved up to 3-million jobs over the past few years,

Another Republican, Todd Rokita of Indiana, also doubted the Fed’s ability to get a handle on inflation.
Bernanke responded that he was confident that the central bank will eventually be able to raise interest rates and stave off inflationary pressures before they get out of control,

The two sides seemed to agree on at least one thing: Both Ryan and Bernanke agreed that Congress and the White House need to enact a plan to cut the government's $1 trillion-plus deficits.

Bernanke again warned Republicans that they shouldn't play political games with the Treasury Department's request to raise the government borrowing authority.

Treasury has asked to raise the $14.3 trillion debt ceiling. House Republicans have vowed to make deep spending cuts a precondition.

We do not want to default on our debts. It would be very destructive, Bernanke said.

At the same time Bernanke was testifying, Rep. Ron Paul, R-Texas, held a hearing on whether the Fed's bond-buying program and record-low interest rates can really help create jobs. Paul, an outspoken critic of the central bank, favors abolishing the Fed.

Lawmakers at that hearing also expressed concerns that the Fed's policies will spur inflation.

If the Fed didn't see this mess coming, will they see the recovery starting in time to turn off the printing presses to stop inflation, asked Rep. Frank Lucas, R-Okla. I am not sure their vision in the future will be any better than in the past.