FRANKFURT - US FEDERAL Reserve chief Ben Bernanke said on Friday that he and other central bankers were prepared to join forces to cement tentative improvements in world credit markets.
'Policymakers will remain in close contact, monitor developments closely, and stand ready to take additional steps should conditions warrant,' Mr Bernanke told the European Central Bank's fifth central banking conference in Frankfurt.
Bernanke leaves door open to another rate cut
WASHINGTON - WARNING that financial markets remain under 'severe strain,' Federal Reserve Chairman Ben Bernanke pledged on Friday to work closely with other central banks to fix global financial problems and left open the door to a fresh interest rate cut to help brace the sinking US economy.
'The continuing volatility of markets and recent indicators of economic performance confirm that challenges remain,' Mr Bernanke said in remarks prepared for a central banking conference in Frankfurt, Germany.
The Fed chairman said there had been 'tentative improvements' in world credit markets after joint efforts by central banks to alleviate the financial crisis.
But Mr Bernanke acknowledged that 'financial markets remain under severe strain' and said central banks, six of which ordered a joint interest rate cut on Oct 8, were ready to take more coordinated action.
'In times like these, we are especially aware of the importance of having close working relationships with our central bank colleagues around the world,' he added.
'The efforts by central banks around the world to increase the availability of liquidity, along with other steps taken by central banks and governments, have contributed to tentative improvements in credit market functioning,' Mr Bernanke said.
The ECB, Fed and other central banks have pulled out the stops in their efforts to get crucial interbank lending started again.
The markets froze as commercial banks became uncertain that loans to each other would be repaid owing to huge losses being suffered following the collapse of the US market for high-risk, or subprime, mortgages.
Money markets determine the availability of credit for vast numbers of people around the globe, from managers trying to fund their businesses to families and students seeking mortgages and personal loans.
Central banks, in particular the ECB and the Fed, have regularly supplied money markets with huge amounts of cash in the past year and a half to ensure commercial banks continue to extend the credit on which the economy depends. -- AFP
