Financial markets remain unsettled by the outlook for inflation and Bernanke said this was among the factors that had hurt stock prices in recent weeks.
"There are a lot of factors that are entering into the stock market, among them some reduction in the desire to bear risk, some change in the evaluation in the global economy and also some concerns about inflation," Bernanke told the hearing.
The Fed has raised interest rates in 16 consecutive quarter-percentage point steps to 5 percent and Bernanke, reiterating the bank's last policy statement, said that rates may still have to rise further.
"In our policy statement on May 10 we noted there are some upside inflation risks in the economy. Among other things, higher inflation would raise mortgage rates by raising long-term interest rates," he said. "And we indicated at that time some additional firming of policy might yet be needed in order to address those risks."
But he also said there was some time to go before the Fed's next meeting, on June 28-29, and it would be sift though all the evidence closely before making its next decision.
"We have about a month to go before the next FOMC (Federal Open Market Committee) meeting and a lot of data between now and then. We will be watching that data very carefully," Bernanke said
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