No preset timeline for Fed bond purchase: Bernanke

Federal Reserve Chairman Ben Bernanke said Wednesday the timetable for trimming the bond purchases is not on a preset course and the Fed would base its adjustment of the 85-billion-dollar monthly program on how the economy performs.

In a congress testimony on the monetary policy, Bernanke repeated the plan he outlined in June that the central bank would begin to scale back its massive bond purchase program later this year if the incoming data were to be broadly consistent with projections.

"If the subsequent data continued to confirm this pattern of ongoing economic improvement and normalizing inflation, we expected to continue to reduce the pace of purchases in measured steps through the first half of next year, ending them around midyear," he said in remarks prepared for delivery to the House of Representatives Financial Services Committee.

Bernanke stressed that the Fed's asset purchases depend on "economic and financial developments," and therefore "by no means on a preset course."

He also tried to draw a distinction between the asset purchase program and the target for the federal funds rate, noting a reduction in the bond buying does not foreshadow a rise in short-term interest rates. The Fed "intends to maintain a high degree of monetary accommodation for a considerable time after the asset purchase program ends and the economic recovery strengthens."

Bernanke said the U.S. economic recovery has continued at a "moderate pace" in recent quarters despite the strong headwinds created by federal fiscal policy. In his view, the housing sector has contributed significantly to recent gains in economic activity and conditions in the labor market "are improving gradually."

Meanwhile, he also said with unemployment still high and declining only gradually, and with inflation running below the Fed's longer-term objective, "a highly accommodative monetary policy will remain appropriate for the foreseeable future."

U.S. stocks managed to move up with modest gains in choppy trading on Wednesday, with the Nasdaq Composite Index hitting a new 12.5-year high, as Federal Reserve Chairman Ben Bernanke broke no new ground in his testimony to the U.S. Congress.

The Dow Jones Industrial Average inched up 18.67 points, or 0. 12 percent, to 15,470.52 points. The S&P 500 added 4.65 points, or 0.28 percent, to 1,680.91 points. The Nasdaq rose 11.50 points, or 0.32 percent, to 3,610.00 points.

Both the S&P and the Nasdaq rose for the ninth time in the last 10 sessions.