WASHINGTON - Federal Reserve Chairman Ben Bernanke says financial markets are still under "severe strain."
He pledged today to work closely with other central banks to fix global financial problems.
He left open the door to a fresh interest rate cut to help brace the sinking U.S. economy.
Bernanke's remarks appear to reinforce the view of Wall Street investors and economists that the Fed probably will lower interest rates again on Dec. 16, its last regularly scheduled meeting this year.
The Fed's key rate is now at one per cent.
"The continuing volatility of markets and recent indicators of economic performance confirm that challenges remain," Bernanke said in remarks prepared for a central banking conference in Frankfurt, Germany.
"For this reason, policymakers will remain in close contact, monitor developments closely and stand ready to take additional steps should conditions warrant."
Although the Fed has ratcheted down rates and taken a flurry of unprecedented actions to arrest the worst financial since the Great Depression, deep problems remain.
Credit is still not flowing normally in the U.S. and overseas, hobbling not only the domestic economy but also the global economy, which many believe is edging toward recession.
Bernanke's remarks come as President George W. Bush and other world leaders descend on Washington for an extraordinary summit to explore options for economic relief and develop plans to prevent a repeat of the type of housing, credit and financial crises now endangering the world economy.