Fed's Evans: U.S. rates right to boost slow growth

CHICAGO, May 13 (Reuters) - The U.S. economy will remain sluggish in the months ahead, but "accommodative" interest rates will help it pick up later this year and in 2009, Chicago Federal Reserve Bank President Charles Evans said on Tuesday.

Evans, in remarks for delivery at the annual Chicago reception of finance group ACCION, said tight credit conditions and the housing slump would continue to restrict consumer spending "for some time" and hold the economy to a "relatively sluggish" pace of expansion.

But "even given the financial turmoil, the stance of monetary policy is accommodative and supportive of growth," he said, adding he expects growth to improve in the second half of the year and return to near potential in 2009.

A copy of his speech was made available in advance.

The United States grew at a slight 0.6 percent rate in the first three months of this year, matching its performance in the fourth quarter of 2007.

To boost the economy, the Fed embarked on an aggressive easing campaign last September, when its benchmark interest rate stood at 5.25 percent. Its last reduction in April took the rate down to 2 percent, its lowest level since late 2004. (Reporting by Steven C. Johnson and Karen Pierog; Editing by Leslie Adler)