NEW YORK (CNNMoney.com) - Treasury prices fell Monday after Federal Reserve Chairman Ben Bernanke stressed the need of the central bank to remain vigilant against inflation.

The dollar rose slightly against the euro and the yen following comments by the Fed chief.

The details See more

The 10-year note fell 7/32 to 100-24/32 to yield 5.02 percent, up from 5 percent on Friday. Bond prices and yields move in opposite directions.

The 30-year bond dipped 7/32 at 90-22/32 to yield 5.11 percent, up from 5.09 the previous session.

The five-year note fell 6/32 ticks, yielding 4.95 percent, and the two-year note slipped three ticks to yield 4.98 percent.

Speaking to a group of bankers on Monday, Bernanke said the Fed needed to keep a close eye on inflation as the economy is starting to move to a slower pace of growth.

The central bank chief called the pace of increases in core inflation "unwelcome developments" and that the Fed must pay particular close attention to incoming economic information.

"With the economy now evidently in a period of transition, monetary policy must be conducted with great care and with close attention to the evolution of the economic outlook as implied by incoming information," Bernanke said. "Given recent developments, the medium-term outlook for inflation will receive particular scrutiny." (Click here for the entire text of his speech)

Bond traders fear inflation since it erodes the value of the fixed-income paying investment.

Bernanke's comments left many investors believing that Bernanke's comments suggest that the odds are in favor of the Fed raising interest rates again when it meets at the end of June in an effort to contain inflation.

Fed funds futures showed up to a 76 percent chance of a 17th consecutive rate increase from the Fed in June, up from 48 percent on Friday, Reuters reported.

"The mere fact that Bernanke chose to emphasize inflation, rather than potential economic weakness, got the market's attention." John Canavan, market analyst at Stone and McCarthy Research Associates in Princeton, N.J. told the news service.

An interest rate increase by the central bank would bring the benchmark federal funds rate to 5.25 percent from its current level of 5 percent.

In other economic news, the Institute for Supply Management U.S. services index released earlier Monday revealed that the service sector kept growing in May but did so at a slower pace as a sharp jump in prices paid held back some businesses. (Full story)

In currency trading, the dollar climbed on Bernanke's comments.

The euro bought $1.2912, down from $1.2923 late Friday. The dollar traded at ¥112.20, up from ¥111.61 in the previous session.

--from staff and wire reports

_________________________

Slippery slope for stocks Monday. Read the full story here.