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Crude prices creeping back into the triple digits have sparked concern about slower economic growth and will no doubt reignite two long-running monetary policy debates:

Should central banks have a single inflation-fighting mandate, as the ECB does, or dual goals of price stability and full employment, like the Fed?

Should policymakers focus on headline inflation rates or strip out volatile food and energy prices?

Fed Chairman Ben Bernanke can expect questions on both topics when he delivers his twice-yearly testimony to Congress on Tuesday and Wednesday.

A day later, the ECB holds its policy-setting meeting and will have to judge whether oil prices pose an immediate threat when year-over-year inflation is already above its target. Economists widely expect the ECB to hold rates steady, but they will be hanging on President Jean-Claude Trichet's every word for clues on whether he is leaning toward a hike soon.

Nigel Gault, chief U.S. economist with IHS Global Insight in Lexington, Massachusetts, said persistently high oil prices would curb consumer spending and drive up the still-lofty jobless rate -- which would make the Fed less inclined to raise interest rates.

"The inflation-phobic European Central Bank might react differently, which may explain why the euro has been rising in recent days," Gault said.

Indeed, back in mid-2008, when oil prices briefly approached $150 a barrel, the ECB raised rates while the Fed held steady.

DUAL MANDATE

In his testimony, Bernanke will probably give Congress an economic assessment that sticks closely to his recent comments that the recovery is strengthening but still not enough to bring about a significant improvement in the job market.

He may also repeat a warning he gave earlier in February that sharp cuts in government spending now could harm the recovery. Republicans in Congress have pressed for deep cuts while Democrats want to keep spending at current levels.

If the parties cannot agree on a spending bill by Friday, the federal government will run out of money for nonessential operations and be forced to close.

Between the spending debate and oil prices, lawmakers will have no shortage of controversial topics for Bernanke. Pricey oil will draw questions on whether the Fed has overstimulated the economy and planted the seeds of runaway inflation.

Bernanke was already under pressure from some in Congress who want to restrict the Fed to a single mandate of price stability. Bernanke has said in the past that the Fed was not seeking any change in its mandate but would "honor" any decision Congress made.

Following the S&P 500's worst week in 15 last week, investors are trying to determine whether the predictions of a correction have been fulfilled or if there's still downside ahead as oil prices remain at elevated levels.

Shares could find some support Monday after positive commentary from Berkshire Hathaway Inc (BRKa.N) Chairman Warren Buffett, who said in his annual letter that Berkshire will engage in record capital spending in the coming year.

"They're certainly encouraging, especially for U.S. investing. I was struck by the level of capital investing he cited," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Whether or not his remarks result in a Monday (rally) remains to be seen. Buffett is a long-term investor, not a timer. He tends to be early."

Along with the direction of oil, potential market movers this week for traders will be the February payrolls report, which will be released on Friday, and Federal Reserve Chairman Ben Bernanke's speech on Tuesday.

The benchmark S&P index fell 1.7 percent last week, a relatively mild pullback for an index that has gained more than 25 percent since the start of September.

"We were looking for a pullback of at least 5 percent and we didn't get it, so I don't think we can expect a lot of new entrants at these levels," said Leo Grohowski, who oversees about $166 billion in assets as chief investment officer at BNY Mellon Wealth Management in New York.

"With the gains we've had, and since tensions remain high in the Middle East, I don't expect to see aggressive buying on the dip this time around," Grohowski said.

A lack of new entrants could mean lighter volume, which could leave the market more susceptible to increased volatility. Lately, volume has been stronger on down days in the market.

"RISKIER" ENVIRONMENT

An unexpected surge in crude prices, sparked by Libya's popular uprising, pressured equities for much of the holiday-shortened previous week on concern that higher energy costs could stifle economic activity.

U.S. crude futures spiked as much as 20 percent during the week to a high of $103.41 per barrel, although they later fell below $100. The CBOE Volatility Index VIX .VIX rose 17 percent last week and at one point was up 30 percent.

Though many say the market remains overstretched, its resilience in the face of geopolitical uncertainty and some disappointing data has some encouraged.

Judy Moses, portfolio manager at Evercore Wealth Management in San Francisco, said that the week's drop had quieted some of the calls for consolidation.

"Had we not seen this pullback, our enthusiasm would be a little tapered because valuations would be fuller," she said. "But it does seem that in general the investment environment is a bit riskier now."

Following the S&P 500's worst week in 15, investors are trying to determine whether the predictions of a correction have been fulfilled or if there's still downside ahead as oil prices remain at elevated levels.

Along with the direction of oil, potential market movers for traders will be the February payrolls report, which will be released on Friday, and Federal Reserve Chairman Ben Bernanke's speech on Tuesday.

The benchmark S&P index fell 1.7 percent in the week, a relatively mild pullback for an index that has gained more than 25 percent since the start of September.

"We were looking for a pullback of at least 5 percent and we didn't get it, so I don't think we can expect a lot of new entrants at these levels," said Leo Grohowski, who oversees about $166 billion in assets as chief investment officer at BNY Mellon Wealth Management in New York.

"With the gains we've had, and since tensions remain high in the Middle East, I don't expect to see aggressive buying on the dip this time around," Grohowski said.

A lack of new entrants could mean lighter volume, which could leave the market more susceptible to increased volatility. Lately, volume has been stronger on down days in the market.

"RISKIER" ENVIRONMENT

An unexpected surge in crude prices, sparked by Libya's popular uprising, pressured equities for much of the holiday-shortened week on concern that higher energy costs could stifle economic activity.

U.S. crude futures spiked as much as 20 percent during the week to a high of $103.41 per barrel, though they later fell below $100. The CBOE Volatility Index VIX .VIX rose 17 percent this week and at one point was up 30 percent.

Though many say the market remains overstretched, its resilience in the face of geopolitical uncertainty and some disappointing data has some encouraged.

Judy Moses, portfolio manager at Evercore Wealth Management in San Francisco, said that the week's drop had quieted some of the calls for consolidation.

"Had we not seen this pullback, our enthusiasm would be a little tapered because valuations would be fuller," she said. "But it does seem that in general the investment environment is a bit riskier now."

S&P MEETS KEY LEVEL

The S&P faces few technical hurdles before it reaches 1,360, and this week it seemed to find support at 1,300. Grohowski said it was "very important, psychologically, that we closed above that level on Wednesday and Thursday."

"I think the oil price rises we've seen so far don't pose a risk to the recovery," he told reporters after a speech on regulation.

"Oil price changes could have the potential, if they were very large, for slowing the recovery, but we have a lot of experience and a lot of data on past instances, and I think it's a manageable risk," he added.

Lacker said that pass-through from higher food and energy prices into broader inflation is limited but that there is a danger that prices that consumers are keenly aware of -- such as what they pay for gasoline -- could spur fears of wider inflation, which ultimately could push prices up.

"There's a risk that the high visibility of gasoline and food price increases would pose a little more risk for inflation dynamics this time than in the past," he said.

A rise in inflation expectations can be self-fulfilling if it leads businesses to raise prices and workers to demand higher wages. However, with the U.S. unemployment rate at 9 percent, many Fed officials do not see much scope for wage increases.

Yellen said she did not intend to provide any new information about the outlook for the economy or monetary policy in her speech.

Lacker, who is not a voter on the Fed's interest-rate setting panel this year, is known as one of the staunchest skeptics of the Fed's easy-money policies. His comments illustrate a likely course of debate at the Fed's meeting in mid-March over whether the biggest risk to the economy is a setback to the recovery or a surge in inflation.

Some Fed policymakers have suggested it might be time to reduce or taper off their $600 billion bond buying program in light of a strengthening recovery, but others feel higher oil prices could create headwinds to the recovery.

Oil prices retreated from 2-1/2-year peaks of almost $120 a barrel hit in London on Thursday to hover below $112 on Friday on Saudi efforts to plug supply gaps. However, turmoil in the Middle East and Northern Africa has added to worries about higher fuel prices and inflation risks around the world.

Another senior Fed official, Vice Chair Janet Yellen, said the Fed's long-term commitment to loose financial conditions will shift when the time comes for the central bank to withdraw its support for the U.S. economy.

"Once the recovery is well established and the appropriate time for beginning to firm the stance of policy appears to be drawing near, the (Fed) will naturally need to adjust its 'extended period' guidance and develop an alternative communications strategy," she told the Booth School conference.

Yellen said she did not intend to provide any new information about the outlook for the economy or monetary policy in her speech.

Lacker also said stress tests for banks come at a cost but are valuable for preventing financial panics.

"Quantifying the risks at large financial institutions is a complex and costly process that is vulnerable to manipulation," he said at the event sponsored by the University of Chicago's Booth School of Business.