The government and Federal Reserve Board’s actions “will help unlock lending capacity and will move us toward financial stability,” according to Federal Reserve Bank of Chicago president Charles L. Evans, who warned “it will not be an easy process, and it could take some time” for the financial markets to return to normal.

“At this time it is very difficult to judge how long the downturn might last and how deep it ultimately will be,” Evans told the Economic Club of Indiana Friday, according to prepared text of his speech released by the Fed.

“As financial markets work through their problems — with important help from government policy — and credit flows improve, we will see a return of growth in spending, production, and employment,” he said. “But given the magnitude of the problems that we face, we could see activity remaining quite sluggish through much of 2009.”

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