Bernanke pledges low Fed rates for 'extended period'

U.S. Federal Reserve chairman Ben Bernanke says the Fed will eventually be able to reel in its extraordinary financial stimulus and prevent a flare-up of inflation once the economy's recovery is more firmly rooted.

In testimony before the U.S. House financial services committee Tuesday, Bernanke also said any such steps would be far off in the future and that the central bank's focus remains "fostering economic recovery."

To that end, Bernanke again pledged to keep the Fed's key bank lending rate at a record low near zero for an "extended period."

Economists predict rates will stay at record lows through the rest of this year.

Laying out a plan now to wind down the Fed's stimulus may give Bernanke more leeway to hold rates at record lows to brace the economy. That's because doing so could tamp down investors' fears that the agency's aggressive actions to lift the country out of its longest recession since the Second World War could spur inflation later on.

"It is important to assure the public and the markets that the extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation," Bernanke said.

"We are confident that we have the necessary tools to implement that strategy when appropriate."