Bernanke: Economy May Still Suffer

Many economists had predicted the Fed might drop it key that rate again when it next meets April 29-30, although Bernanke's remarks cast some doubt on that scenario.

"We are fighting against the wind," Bernanke said. The Fed's interest rate cuts and other actions are working their way through the economy and are having the effect of "at least offsetting significantly the headwinds coming from these financial factors," he said.

Related

WATCH: What Does The Fed's Plan Mean For You?

RSS Feed: Send News to Your Computer

Business News: Sign Up for MONEYScope E-Mails

Housing, credit and financial woes are threatening to push the country into a deep recession. The situation has emerged as a top concern for presidential contenders and a hot-button issue for Congress. It has thrust the White House and the Fed in crisis-management mode.

Faced with mounting home foreclosures and job losses, Bernanke has been under immense political and public pressure to provide relief and help turn around a faltering economy.

Committee Chairman Sen. Charles Schumer peppered Bernanke with questions about the Fed's moves to aid once mighty Wall Street firm Bears Stearns and then juxtaposed that with -- what he believed was a lack of help -- to millions of people at risk of losing their homes.

"I hope that you will use your position to jawbone this administration to get behind the housing relief effort before Congress." Schumer said. "Addressing the housing crisis head-on will do as much to instill confidence in the markets as lowering interest rates or bolstering regulatory oversight of wayward mortgage lenders and financial institutions. We need to do all of it."

Many private analysts believe the economy contracted in the first three months of this year, signaling the start of a recession. The government releases first-quarter results later this month. The economy lost jobs in January and February, with many economists bracing for more losses when the report for March is released on Friday. Bernanke said he expected unemployment to move "somewhat higher in coming months."

"Clearly, the U.S. economy is going through a very difficult period," he told lawmakers, adding that all the problems have weighed heavily on consumers whose spending is indispensable to economic vitality.