Recession could end in 2009,says Bernanke

Still,Bernanke stressed — as he did to Congress last month — that the prospects for the recession ending this year and a recovery taking root next year hinge on a difficult task: getting banks to lend more freely again and getting the financial markets to work more normally. “We’ve seen some progress in the financial markets,absolutely,” Bernanke said. “But until we get that stabilised and working normally,we’re not going to see recovery. But we do have a plan. We’re working on it. And,I do think that we will get it stabilised,and we’ll see the recession coming to an end probably this year.”

Even if the recession,which began in December 2007,ends this year,the unemployment rate will keep climbing past the current quarter-century high of 8.1 per cent,Bernanke said. A growing number of economists think the jobless rate will hit 10 per cent by the end of this year.

Asked about the biggest potential dangers now,Bernanke suggested a lack of “political will” to solve the financial crisis. He said,though,that the US has averted the risk of plunging into a depression. “I think we’ve gotten past that,” he said.

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It’s rare for a sitting Fed chief to grant an interview,whether for broadcast or print. Bernanke said he chose to do so because it’s an “extraordinary time” for the country,and it gave him a chance to speak directly to the American public.