Since sustained hikes in oil prices could “cause inflation expectations to become less well-anchored,” the Federal Reserve Board will monitor developments and “respond as necessary,” Fed chairman Ben Bernanke told the Senate Banking, Housing, and Urban Affairs Committee Tuesday.

While companies have been slow to pass through price increases during the recession and recovery, “currently, the cost pressures from higher commodity prices are also being offset by the stability in unit-labor costs,” Bernanke said, according to a prepared text of his testimony released by the Fed.

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