Fed's Plosser says Fed needs clear exit strategy

NEWARK, Delaware (Reuters) - The U.S. recession could be one of the longest in the post-World War Two era, but the Federal Reserve needs to articulate a clear exit strategy from its emergency lending programs to ensure future economic and financial market stability, a top Fed official said on Wednesday.

Plosser expects overall economic growth for 2009 to be well below 2 percent, after negative growth in 2008.

"Given that forecast, the current recession could well be one of the longest in the post-World War II era," he said.

The collapse of the housing market tipped the United States into recession in December 2007 and fuelled the worst financial crisis since the Great Depression.

The Fed has more than doubled the size of its balance sheet to over $2 trillion (1.38 trillion pounds), buying a raft of assets to support the key credit markets.

"Our aggressive lending, while intended to help the economy and financial crisis recover, poses its own set of challenges," Philadelphia Federal Reserve Bank President Charles Plosser told an economic outlook conference at the University of Delaware.

"We must develop a well-articulated exit strategy if we are to maintain control of monetary policy and encourage the revival of strong and disciplined credit markets."

Plosser, was a voting member of the rate-setting Federal Open Market Committee in 2008 and won't be voting again until 2011.

(Reporting by Kristina Cooke, Editing by Chizu Nomiyama)