In his first TV interview, US Federal Reserve Chairman Ben Bernanke said that the US’ worst recession in decades would likely end this year before a recovery gathers steam next year.
The “green shoots” of economic revival are already evident, Bernanke told CBS program 60 Minutes in the interview broadcast late on Sunday, which the network said was the first by any sitting Fed chairman in 20 years.
His assessment chimed with a new tone of cautious optimism from US President Barack Obama’s administration as top economic aides took to the airwaves earlier on Sunday.
“It is an economic war. We haven’t won yet. We have staged a wonderful battle,” Christina Romer, chairwoman of the White House Council of Economic Advisers, said on NBC’s Meet the Press.
Echoed by National Economic Council director Lawrence Summers, Romer said a proposal from Treasury Secretary Timothy Geithner to clean out US banks’ bad loans would “come out very soon.”
Predicting that no more big banks will fail, Bernanke also called on Washington’s squabbling politicians to show the will needed for recovery, arguing the world came “very close” to financial meltdown last September before government intervention.
The US central bank chief, whose decision to sit down last Wednesday for the rare interview underscored the gravity of the crisis, said much depends on fixing the banking system.
“We’re working on it. And I do think that we will get it stabilized and we’ll see the recession coming to an end probably this year,” Bernanke said.
“We’ll see recovery beginning next year. And it will pick up steam over time,” he said.
Asked if the US had escaped a repeat of the 1930s Great Depression, Bernanke said: “I think we’ve averted that risk.”
Last week, the blue-chip Dow Jones share index staged a stunning comeback from 12-year lows on hopes for a recovery by the battered banking sector and tentative signs of stability in some economic reports.
A government fund of US$500 billion is stabilizing the mortgage market and business lending is picking up, Bernanke said.
“And I think as those green shoots begin to appear in different markets and as some confidence begins to come back, that will begin the positive dynamic that brings our economy back,” he said.
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