June 26 (Bloomberg) -- Federal Reserve Bank of Dallas President Richard Fisher said central bank efforts to revive the economy have kept the U.S. from falling into a depression.

“Your central bank has worked hard to pull the economy back from the abyss,” Fisher said in a speech today in Dallas that was similar to remarks he made in May. He said he expects a “slow recovery,” with a “meek” near-term outlook for inflation.

The bank president’s remarks buttress the Fed’s assessment this week that the U.S. recession is easing. Policy makers voted unanimously to refrain from increasing their $1.75 trillion bond-purchase program, saying “the pace of economic contraction is slowing” and noting “conditions in financial markets have generally improved.”

Still, “we have miles to go before we sleep,” Fisher, 60, said in his remarks to the Dallas Friday Group, a nonprofit group that provides forums on current events. The bank president told reporters after the speech that the Fed’s exit strategy from its emergency lending programs is “not ready to be articulated” until the “appropriate time.”

The Fed continues to look for signs that the world’s largest economy will recover from the deepest recession in five decades, and has kept the benchmark interest rate between zero and 0.25 percent since December. The rate will likely stay at “exceptionally low levels” for an “extended period,” policy makers said in their June 24 statement.

Unemployment Rate

Recent data on some areas of the economy, such as housing and manufacturing, show a smaller pace of decline even as joblessness climbs. The unemployment rate reached 9.4 percent in May and jobless claims rose last week.

“The pace of decline” in the U.S. economy “will moderate in the current quarter and it looks increasingly likely that we will begin to see positive growth impulses” during the second half of 2009, Fisher said. “I would be delighted, but surprised, if that growth turns out to be strong enough and sustainable enough to arrest” an increase in unemployment.

A drop in Libor, or the London interbank offered rate, and other measures of financial stress suggest credit markets are recovering from the seizure that followed the collapse of Lehman Brothers Holdings Inc. in September. The cost of borrowing in dollars for three months in London dropped below 0.6 percent today for the first time, according to the British Bankers’ Association.

Fisher told reporters that yields appear to be “subdued” and that he isn’t paying attention to traders’ expectations for a rate increase by early 2010. He also dismissed China’s call for a new world reserve currency, saying “it’s not going to happen.”

“I don’t see the dollar being supplanted as the leading currency in the world,” Fisher said.

To contact the reporter on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

Last Updated: June 26, 2009 17:40 EDT