U.S. Federal Reserve Chairman Ben Bernanke said on Wednesday that the Fed was prepared to take action to reverse any slowdown in the economic recovery, including another round of quantitative easing.

Bernanke offered an optimistic forecast during his testimony to Congress but tempered the prediction by saying that measures to encourage a recovery such as purchasing Treasury bonds remain on the table if growth falls short of what is expected.

The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risk might reemerge, implying a need for additional policy support, Bernanke said.

That raised the possibility of a third round of quantitative easing, something Bernanke told lawmakers is one of the weapons in his arsenal as he seeks keep all the options on the table.

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