Bernanke Expects Housing Recovery by Year End

Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday he expects the downtrodden
U.S. housing sector to improve by the end of the year, a senator who participated in the closed-door meeting said.

Federal Reserve Bank Chairman Ben Bernanke
Pablo Martinez Monsivais
Federal Reserve Bank Chairman Ben Bernanke

"He let us believe that the housing situation should begin to ameliorate by the end of the year," said Sen. Pete Domenici, a New Mexico Republican, told reporters.

Bernanke spoke to Republican senators about conditions in the economy, where a housing slump and a credit crunch have some analysts forecasting a recession, lawmakers said.

"He gave a very good, succinct, short overview of where he thought the economy was right now and how it might move forward," said Sen. Jon Kyl of Arizona.

The Fed has lowered benchmark interest rates to 3 percent from 5.25 percent in September, including a hefty 1.25 percentage points last month, to blunt the effects of housing declines and tighter credit.

Bernanke is due to testify before the Senate Banking panel on Thursday at 10 a.m. EST on the state of the economy and the financial system.