Ben Bernanke sent a message Tuesday to Congress: The Federal Reserve's low-interest-rate policies are giving crucial support to an economy still burdened by high unemployment.

The Fed chairman acknowledged the risks of keeping rates low indefinitely. But he expressed confidence that such risks pose little threat now.

Delivering the Fed's semiannual monetary report to Congress, Bernanke sought to minimize concerns that the central bank's easy-money policies might cause runaway inflation later or dangerous bubbles in assets like stocks.

He sought to reassure sometimes-skeptical senators that the Fed is monitoring potential threats and can defuse them before they hurt the economy.

Several Fed policymakers said at their most recent meeting that the Fed might have to scale back its bond purchases because of the risks.

Those comments, contained in minutes released last week, fanned speculation that the Fed might soon allow long-term borrowing rates to rise. Stock prices fell sharply.

But Bernanke gave no signal that the Fed might shift away from its low-interest-rate policy. He said its aggressive program to buy $85 billion US a month in Treasurys and mortgage bonds had kept borrowing costs low.

Bernanke urges gradual budget cuts

And that, in turn, has helped strengthen sectors such as housing and autos, he said.

On budget policy, Bernanke urged Congress to replace the automatic spending cuts due to start Friday with more gradual reductions in budget deficits in the short run. He noted that the Congressional Budget Office estimates that the automatic spending cuts that take effect Friday would shave growth by 0.6 percentage point this year.

"Congress and the administration should consider replacing the sharp, front-loaded spending cuts required by the sequestration with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run," Bernanke said.

Economists said Bernanke made clear the Fed has no plans to scale back its pace of bond purchases.

"That policy will continue to be supportive for growth, with no sign of imminent plans to scale down (the bond purchases) and certainly no plans to remove accommodation for a very long time," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

Addressing concerns that the bond purchases, which have pushed the Fed's balance sheet to a record high above $3 trillion, could trigger high inflation, Bernanke said:

"Inflation is currently subdued and inflation expectations appear well-anchored. We do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation."

Growth uneven

He said that over the past six months, the economy has grown moderately but unevenly. Bernanke said the pause in growth seen in the final three months of 2012 "does not appear to be a stalling-out of the recovery."

He said growth appears to have picked up in the past two months.

Shortly before the Fed chairman spoke, several reports pointed to surprising economic strength: Americans' confidence in the economy rebounded this month, new-home sales jumped in January to the highest level since 2008, home prices rose at a healthy pace in December compared with a year ago and profits of U.S. banks jumped last quarter to the highest level in six years.

Bernanke was asked whether the Fed's bond buying could push its balance sheet to $4 trillion. He said that it has no target for how much in bonds it plans to buy.

He noted that the Fed's balance sheet is less than that of the Bank of Japan, which has battled for more than two decades to strengthen the sluggish Japanese economy.

Asked about possible threats to the U.S. economy from Europe's financial crisis, including new fears about Italy, Bernanke said that the exposure of American banks to Italy's debt was small.

He said a bigger threat could emerge if investors grew worried that the debt crisis might suddenly be worsening. He doesn't foresee such a threat, Bernanke said.