“Higher energy prices would probably slow growth, at least in the short run,” Bernanke said today in response to questions from the House Committee on Oversight and Government Reform. Rising fuel prices “create at least short-term inflation pressures, and moreover, they act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy.”

Bernanke and his colleagues on the Federal Open Market Committee are watching oil and gasoline prices that threaten U.S. growth and are likely to push up inflation “temporarily,” according to their statement last week, when they said interest rates are likely to remain near zero through at least late 2014.

Crude oil for May delivery climbed $1.36, or 1.3 percent, to $107.43 a barrel at 11:38 a.m. today on the New York Mercantile Exchange. The national average price of a gallon of gasoline rose to $3.86 yesterday from $3.28 on Jan. 1, according to the American Automobile Association.

Bernanke’s testimony today focused on the European sovereign-debt crisis, as the Fed chairman told Congress that Europe must further strengthen its banks and that its financial and economic situation “remains difficult” even as stresses have declined.

Troubled Countries

“Full resolution of the crisis will require a further strengthening of the European banking system,” Bernanke said. The region’s leaders also must “increase economic growth and competitiveness and to reduce external imbalances in the troubled countries,” he said.

Bernanke said reduced stress is a “welcome development” for the U.S. His comments echoed the FOMC’s statement last week that “strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook.”

The Fed isn’t considering buying any of Europe’s sovereign debt because the purpose of the central bank’s authority to purchase such debt is to maintain foreign-exchange reserves, Bernanke, 58, said in response to questions.

He also said the Fed has reviewed the credit-default swaps, or contracts that U.S. banks have used to insure against defaults in Europe, and that they are “widely dispersed.” The central bank doesn’t expect a repeat of 2008, when American International Group Inc., a large counterparty on swaps, collapsed, Bernanke said.

AIG Example

AIG is “an example of what we don’t see now,” he said.

Recent economic reports have shown strength in the U.S. economy as the threat from Europe has eased.

Sales of previously owned U.S. houses held in February near an almost two-year high, a report from National Association of Realtors showed today in Washington. The median price increased over the past year for the first time since November 2010.

The Commerce Department reported yesterday that builders broke ground on 698,000 homes at an annual rate in February, close to a three-year high. Building permits, a proxy for future construction, rose to the highest level since October 2008.

U.S. stocks were little changed today as energy shares slumped after Baker Hughes Inc. said operating profit will drop and on concern the biggest first-quarter rally since 1998 has outpaced prospects for economic growth. The Standard & Poor’s 500 Index was at 1,405.51 at 12:20 p.m. in New York. The index has risen 12 percent so far this year.

European markets have stabilized on speculation that government leaders are containing the region’s debt crisis. The Stoxx Europe 600 Index has rallied 25 percent since Sept. 22, when it closed at a two-year low. The rate that London-based banks say they pay for three-month loans in dollars was 0.474 percent yesterday. Libor, a gauge of banks’ willingness to lend, is down from a 30-month high of 0.583 on Jan 3.