Bernanke Sees Soft Housing Landing

New Federal Reserve Chairman Ben Bernanke told Congress Wednesday that he sees the need for more interest rate hikes in order to keep prices in check.

He cited other risks to the economy, including a softening housing market and the risk of higher energy prices both cutting into consumer spending. And he promised that the Fed will be on watch for signs of an economic slowdown as it sets interest rates at future meetings.

He does not think there will be any sharp drop in housing value, with mortgage rates relatively low despite recent increases. He said strong employment levels should continue to support housing markets, adding that a "leveling out or a modest softening of housing activity seems more likely than a sharp contraction."

Still, at this point, Mr. Bernanke suggested he was hopeful the high-flying housing market would make a safe landing by gradually losing altitude.

“A leveling out or a modest softening of housing activity seems more likely than a sharp contraction, although uncertainty attends the outlook for home prices and construction,” Mr. Bernanke said. “Prices and construction could decelerate more rapidly than currently seems likely.”