Bernanke urges caution in overly rapid deficit cutting

WASHINGTON – Federal Reserve Chair Ben Bernanke defended the central bank's decision to hold interest rates at record-low levels for the next three years, during a contentious hearing Thursday before federal lawmakers.

The Fed chief told the House Budget Committee that the central bank's plan is an appropriate step to combat high unemployment while inflation is stable.

Bernanke was challenged immediately on the issue by the panel's chairman, Paul Ryan, a Wisconsin Republican, who said the Fed's move would risk higher inflation and hurt growth.

STORY: Fed: Interest rates unchanged, no hikes likely till late 2014

"This policy runs the great risk of fueling asset bubbles, destabilizing prices and eventually eroding the value of the dollar," Ryan told Bernanke. "The prospect of all three is adding to uncertainty and holding our economy back."