Two top Fed officials see recession ending this year

By Kristina Cooke

NEW YORK (Reuters) - The U.S. recession will likely end this year and policymakers must be ready to act quickly to ensure inflation does not take hold when the economy recovers, two top Federal Reserve officials said on Monday.

Richmond Federal Reserve President Jeffrey Lacker and Kansas City Federal Reserve President Thomas Hoenig offered slightly different views on when the world's biggest economy will begin to grow again.

Lacker, speaking to business leaders in Charlottesville, Virginia, said that given the resilience of U.S. consumers --whose spending drives the U.S. economy -- and the unprecedented stimulus injected into the U.S. economy by the Fed, he expects growth to resume by year end.

Hoenig, speaking in New York, was less confident saying the economic outlook remained "uncertain" and it would take "most of the rest of the year" to move out of recession before starting on a path of "steady, slow" recovery in 2010.

Housing and construction data released on Monday added to other recent signs that the worst of the longest recession since the Great Depression may be over, driving the S&P 500 stock index .SPX into positive territory for the year.

Last week, the Federal Reserve monetary policy committee said the outlook for the U.S. economy has improved a bit in recent weeks but that low interest rates would be needed for some time to ensure it recovers from its deep recession.

Hoenig, who is not a voting member on the central bank's policy-setting committee this year, said on Monday that the U.S. still has "a ways to go before markets will function effectively without government assistance."

The Federal Reserve's balance sheet has more than doubled to more than $2 trillion (1.3 trillion pounds) as it set up an array of emergency lending programs to support key credit markets.