Federal Reserve Chairman Ben Bernanke said on Monday the U.S. central bank did not foresee a recession but that growth was too slow to bring down the nation's jobless rate.

"Right now we see an economy which is expanding. We see employment ... still growing," Bernanke said. "So, we expect the economy to continue to grow, that's our best forecast as of now. So, we are not expecting a recession."

"That being said, with an economy which is growing only sort of 1-1/2 to 2 percent, that is not fast enough to lower the unemployment rate. That is my concern," he added.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

He also delivered a broad defense of the central bank's controversial bond-buying stimulus plan, saying its actions are necessary to support a flagging economic recovery.

Bernanke pushed back against accusations that the Fed's policy is laying the groundwork for inflation in the future or enabling the government to run large budget deficits.

He said that while the country's unusually weak economic performance had forced the Fed to resort to less conventional tools after bringing interest rates all the way down to effectively zero, the Fed's goals of price stability and maximum sustainable employment have not changed.

"These goals mean, basically, that we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable," Bernanke told the Economic Club of Indiana.

He reiterated the Fed's commitment, made at the September meeting where it announced a new, open-ended program of asset purchases, to keep a heavy dose of monetary stimulus in place even after the economic rebound appears to gain traction.

"As long as price stability is preserved, we will take care not to raise rates prematurely," Bernanke said.

The Fed chief noted inflation has fluctuated close to Fed officials' target of 2 percent, and that inflation expectations have remained stable, suggesting low risk of a sudden spurt of price rises.

He also argued against the notion that the Fed was monetizing the federal debt or effectively printing money to keep the government's borrowing costs low.

"That's not what's happening, and that will not happen," Bernanke said. "We are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates."

The U.S. economy expanded at a paltry 1.3 percent annual rate in the second quarter, far less than what is needed to bring down the country's elevated 8.1 percent jobless rate.

In response to the financial crisis and deep recession of 2007-2009, the Fed slashed official borrowing costs down to rock bottom and bought some $2.3 trillion in mortgage and Treasury securities in an effort to keep down long-term rates and stimulate investment.

These actions were not without critics, including many Republicans, who have argued they threaten future inflation. The party's presidential candidate, Mitt Romney, has vowed if elected to not renominate Bernanke, himself a Republican, to a third term when his current one expires in January 2014.

Bernanke disputed the charge that the Fed's policies are damaging savers, arguing they will also benefit from a strong and growing economy.
 
Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did