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Last Updated: Friday, 25 August 2006, 17:17 GMT 18:17 UK
Fed chief warns on protectionism
Ben Bernanke, Fed Reserve head
Mr Bernanke did not discuss monetary policy
US Federal Reserve chief Ben Bernanke has warned of the threat posed to world economic growth by protectionism.

Speaking at an economic conference, Mr Bernanke said "economic growth should not be taken for granted".

Mr Bernanke said that protectionism - while the "natural reaction" to globalisation - was not desirable.

The speech comes after recent figures on US housing and durable goods indicated that the world's largest economy could be slowing down.

'Geopolitical concerns'

Policy-makers face the hurdle of ensuring that the benefits of global economic integration are widely shared, the Fed chairman said.

Mr Bernanke also highlighted geopolitical risks, including international terrorism.

"The risk of terrorism already constrains the pace worldwide of economic integration and may do so even more in the future," he warned.

One omission from Mr Bernanke's speech was any clear indication of the Fed's monetary policy, including the direction of interest rates.

After raising rates consistently for the past two years, the Federal Reserve decided to keep rates unchanged in early August.

The Fed's aim is to increase rates enough to stop inflation but without damaging economic growth.

Analysts fear that if interest rates keep increasing this could hamper economic growth, by making it more expensive for both consumers and companies to borrow money.

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