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The U.S. economy will begin to turn up later this year provided the financial sector continues to mend, although unemployment will remain high for a while, Federal Reserve Chairman Ben Bernanke said on Tuesday.


In testimony prepared for delivery to a congressional committee, Bernanke sounded more confident that a recovery was at hand than he had in recent weeks.

He said the U.S. housing market may be bottoming after a three-year slide, and pointed to tentative signs of a rebound in consumer spending, which is the driving force behind the economy.

"We continue to expect economic activity to bottom out, then to turn up later this year," Bernanke said in the testimony to the Congress' Joint Economic Committee.

However, he added that even after the recovery begins, "the rate of growth of real economic activity is likely to remain below its longer-run potential for a while."

That will leave slack in the economy, keeping inflation low, which in turn suggests that the central bank will keep interest rates low for some time.

The Fed dropped benchmark overnight interest rates to near zero in December. After a meeting on April 28-29, it repeated that it would likely hold borrowing costs at an unusually low level for "an extended period."


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