Federal Reserve chairman Ben Bernanke has said China's recent interest rate hike was a 'surprising' way for country to tackle inflation.
In a rare criticism, Bernanke said raising the yuan's value would be a better way to tackle inflation than a rate hike that would also curb domestic demand.
Earlier he said US unemployment remains too high for comfort despite signs of strength in the economic recovery.
In testimony to the US House of Representatives' Budget Committee that largely echoed a speech he delivered last week, Bernanke also warned about the dangers of unsustainable budget deficits.
He cited a number of encouraging hints from the labour market, including a drop in the jobless rate to 9% in January from 9.8% in November - the biggest two-month drop since 1958. At the same time, Bernanke expressed concern at the still-slow pace of hiring.
'The job market has improved only slowly,' he said, noting the economy had only made up just over 1 million of the more than 8 million jobs lost during the deepest recession in generations.
Bernanke said inflation remained quite low in the US, a tough message to deliver amid headlines of rising food and commodity costs across the globe. He also said expectations of future inflation had remained 'stable', suggesting little worry a inflationary psychology was building despite rising petrol costs.
The Fed chairman also repeated a warning to politicians that they should bring the budget under control or the markets would force them into it.
'Creditors would never be willing to lend to a government with debt, relative to national income, that is rising without limit,' he said.
