(Bloomberg News) Federal Reserve Chairman Ben S. Bernanke didn't rule out expanding the central bank's asset purchases aimed at stimulating the economy, saying he doesn't want to see the U.S. relapse into a recession.

Asked at a House Financial Services Committee hearing today what conditions would warrant a third round of so-called quantitative easing, Bernanke said that "what we'd like to see is a sustainable recovery. We don't want to see the economy falling back into a double dip or to a stall-out."

Bernanke's testimony today and yesterday signaled that he will keep the Fed on course to complete $600 billion of Treasury purchases through June under the second round of quantitative easing, a policy criticized by Republican lawmakers as risking an inflation surge. He's avoided saying what the central bank may do after that.

A third round of purchases "has to be a decision" of the Federal Open Market Committee, and "it depends again on our mandate" for stable prices and maximum employment, Bernanke said in response to Texas Representative Jeb Hensarling, the House panel's vice chairman and a critic of QE2.

"We're looking very closely at inflation both in terms of too low and too high," Bernanke said during the second day of semiannual testimony on monetary policy. "I want to be sure that you understand that I am very attentive to inflation and potential risks for inflation. That will certainly be a major consideration as we look to determine how to manage this policy."

Beige Book

Separately today, the Fed said in its regional Beige Book survey that the labor market improved throughout the country early this year, driven by increasing retail sales and "solid growth" in manufacturing.

Overall, the economy "continued to expand at a modest to moderate pace," the central bank said in Washington. Eleven of the Fed's 12 regional banks, including San Francisco and Philadelphia, described their regions as expanding, improving or experiencing moderate growth. Only Chicago reported growth "at a pace not quite as strong" as before.

The Standard & Poor's 500 Index rose 0.4 percent to 1,311.66 at 2:45 p.m. in New York after climbing 0.6 percent earlier.

Treasuries declined after a report earlier today showed the pace of employment growth is picking up before the Labor Department issues February jobs data March 4. The yield on the 10-year Treasury note rose to 3.46 percent from 3.39 percent yesterday.