“The economy has continued to expand, but at a subdued pace,” Mr. Bernanke said at another point. In one rare note of optimism, he revised upward the Fed’s growth estimate for the year and added that consumer spending had somewhat exceeded expectations.

The Fed chief spent the early morning testifying alone, as part of his twice-a-year appearances before Congress, and then joined Treasury Secretary Henry M. Paulson Jr. and Christopher Cox, chairman of the Securities and Exchange Commission. Sitting with them, he endorsed Mr. Paulson’s plan, unveiled on Sunday, to seek legislation to give the federal government temporary power to help Fannie and Freddie, and he also defended the Fed’s opening its own lending facility to the two agencies.

Mr. Bernanke offered no timetable for improved economic performance, declaring that while the risks to the overall economy were still “skewed to the downside,” inflation “seems likely to move temporarily higher in the near term.” The Fed, he said, needed to guard against higher prices’ spreading through the economy.

That mixed warning about rising costs and a downturn reinforced the message of last month’s meeting of the Federal Open Market Committee, the central bank’s policy-making body, that it would not cut interest rates further and, indeed, that higher rates might be necessary to combat inflation.

Despite snaking around branches of IndyMac Bank and a report from the chairwoman of the Federal Deposit Insurance Corporation that more banks were expected to run into trouble, Mr. Bernanke said he did not think there was a significant danger to the banking sector, most of which he said remained profitable.

“Of course, all banks are being challenged by credit conditions now,” the Fed chief said in response to a question from Senator Richard C. Shelby, an Alabama Republican on the banking panel. “The good news is that the banking system did come into this episode extremely well capitalized, extremely profitable.”

Image President Bush tried to reassure Americans on Tuesday. Credit... Evan Vucci/Associated Press

But concerns that consumer banking could succumb to the ills of the credit crisis clearly rattled official Washington, as Mr. Bush’s citation of the federal government’s insurance of bank deposits made clear.