'Extended Period'

Responding to a question from Representative Nydia Velazquez, a New York Democrat, Bernanke said the Fed's policy of keeping its benchmark rate near zero for an "extended period" helps provide support to the economy, "which in our judgment, it still needs."

"The economy's recovery is not firmly established, and we think monetary policy needs to be supportive," he said.

The second round of bond buying follows a $1.7 trillion first round of purchases of mortgage-backed debt and Treasuries.

Since August, when Bernanke signaled the Fed might buy securities to stimulate the economy, "downside risks to the recovery have receded, and the risk of deflation has become negligible," he said in testimony this week.

Many of the questions Bernanke fielded dealt with the outlook for the federal budget deficit, giving the Fed chief an opportunity to reiterate his call for Congress to come up with a long-term plan for reining in the national debt. Bernanke's statements resonated especially with House Republican lawmakers. The House passed a bill last month cutting $61 billion from 2011 government spending.

Debt, Deficit

"QE2 has given us some opportunity to act on our debt and deficit, and we have not taken advantage of that," panel Chairman Spencer Bachus, an Alabama Republican, said during today's hearing. "Any criticism directed at the chairman, you need to also sort of point that finger back at yourselves."

Bernanke got caught up in a debate over the extent to which House spending cuts would result in job losses. He told lawmakers the reductions may lead to about 200,000 fewer jobs over the next couple of years. That compares with the prediction of Mark Zandi, chief economist at Moody's Analytics, that the budget reductions would mean 700,000 fewer jobs in the U.S. by the end of 2012.

Last week, the Commerce Department reduced its estimate of fourth-quarter growth to a 2.8 percent annual pace. Consumer purchases rose at a 4.1 percent pace, the most since the same three months in 2006, compared with a 4.4 percent rate originally estimated.