Bernanke says banks ready to act

Mr Bernanke says policymakers are ready to take additional steps.

US Federal Reserve chief Ben Bernanke says that the world's central banks are ready to take further action to ease troubled credit markets.

Speaking at a central bankers' forum in Frankfurt, he warned that financial markets remained under "severe strain".

The Fed cut interest rates last month in co-ordinated move along with other major central banks, including the Bank of England.

His comments raised expectations that US interest rates would be cut further.

'Additional steps'

Mr Bernanke did note "tentative improvements" in credit markets but said that "monetary policy actions have not resolved the ongoing strains in financial markets".

"Policymakers will remain in close contact, monitor developments closely, and stand ready to take additional steps should conditions warrant," he added.

So far there is little evidence that policymakers have been able to avert a severe global downturn.

US retail sales fell sharply in October in the latest sign of weakening economic activity and eurozone economies have official entered a recession, according to official figures released on Friday.

Leaders of the G20 developed and emerging economies are meeting in Washington this weekend to discuss how to contain the financial crisis.