The dollar dipped slightly as new chairman of the US Federal Reserve, Ben Bernanke, prepared to face a hostile Congress calling for a limit to the recent rises in interest rates.

The dollar stood at 1.7428 against the pound and at 1.1909 to the euro.

In his first meeting as chairman this coming Wednesday, it is expected that Professor Bernanke will ignore their pleas and continue the Fed's hawkish credit-tightening campaign.

The former Princeton professor started at the Fed on February 1st and will meet a Joint Economic Committee (JEC) that is said to be worried about the effects of interest rates on the economy.

Senator Paul Sarbanes of the banking committee was among those to urge an end to the rate rises during a debate on Professor Bernanke's nomination.

US productivity fell last year for the first time since 2001 to 2.7 per cent driving labour costs up by 3.5 per cent, something that is contributing to fears of a rise in inflation.

Interest rates have increased 14 times in a row with the Fed still stating that "some further policy firming may be needed".