WASHINGTON (AP) — The Federal Reserve, still working to combat the effects of a severe credit squeeze, said yesterday it had auctioned another $50 billion to cash-strapped banks at an interest rate of 2.82 percent.

It marked the ninth in a series of auctions that began in December that so far have pumped $310 billion in short-term loans into the nation's banking system.

The Fed hopes that the increased resources will encourage banks to keep lending to consumers and businesses and alleviate the economic drag from a severe credit squeeze that began last August.

Fed chairman Ben Bernanke told Congress last week that it was possible that all all the blows the economy has sustained from the credit crisis, a prolonged housing slump and and now rising unemployment could push the country into a recession. But he said he still believed that the period of weakness would be short-lived and the economy would resume stronger growth in the second half of this year.

The Fed has been holding its auctions to supply direct loans to commercial banks every two weeks starting in December.