Nov. 3 (Bloomberg) -- Tight credit conditions may keep the U.S. economy in a slump through the end of next year, while inflation pressures have disappeared, Federal Reserve Bank of Dallas President Richard Fisher said.

`` My forecast is I don't see any economic growth through 2009,'' Fisher said in a Bloomberg Television interview. ``The credit crisis reached up and grabbed the throat of the global economy and choked off economic growth.''

Fisher supported the Fed's decision last week to cut its benchmark interest rate to 1 percent in an effort to revive credit and keep a self-reinforcing decline in consumer spending and bank lending from triggering a global recession. In earlier votes, he had dissented five times because of concern over accelerating inflation.

Plunging commodity prices, including a more than 50 percent decline in the cost of oil, are likely to prompt declines in prices for a few months, Fisher said. Inflation pressures ``vaporized'' in September as the credit crisis worsened, he said.

Inflation has ``screeched to a halt,'' Fisher said. `` I am not worried about that now. The issue presently is to get the credit system working again.''

Heading Lower

Fed watchers including Lyle Gramley, a former Fed governor, say policy makers will cut the rate by 0.5 percentage point at their next scheduled meeting in December, pushing it toward levels last seen in 1958. `` I think we could, potentially, go a little bit lower'' than 1 percent, San Francisco Fed President Janet Yellen said last week.

Fisher said policies to create growth will shift ``mostly'' to fiscal authorities rather than the Fed.

``We have done an awful lot already'' and ``we are getting close to zero,'' he said. ``It is very important'' that a newly elected Congress address the financial crisis, he said.

The U.S. economy shrank at a 0.3 percent annual rate last quarter, the most since the 2001 recession, the Commerce Department reported last week. Economists expect the slump to persist in the fourth quarter.

Labor Department figures are expected to show a drop of 200,000 jobs in October, according to a Bloomberg News survey of economists. A report showed Oct. 3 that payrolls fell by 159,000 in September, the biggest drop in five years. The unemployment rate held at 6.1 percent, up from 5 percent as recently as April.

Fed Loan Programs

While cutting the main rate during the past 13 months from 5.25 percent, Fed Chairman Ben S. Bernanke, 54, has created six loan programs channeling at least $700 billion in cash and collateral into money markets as of Oct. 22.

The Fed's balance sheet may reach $3 trillion by year's end, reflecting growth of various liquidity measures supporting banking institutions, Fisher said. As of Oct. 29, the Fed's balance sheet was $1.97 trillion.

``We are not out of the woods'' on the credit crisis, even though some interest-rate spreads have recently shown improvement, he said.

Fisher praised Bernanke as a scholar of the Great Depression who foresaw the crisis early on, adding he deserves to be reappointed by a new president.

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net;

Last Updated: November 3, 2008 16:00 EST