(Agencies)
Updated: 2008-01-11 09:28

WASHINGTON - Federal Reserve Chairman Ben Bernanke on Thursday acknowledged the economy faces increased risks and indicated the US central bank is ready to cut interest rates aggressively to support growth.

US Federal Reserve Board Chairman Ben Bernanke speaks in Washington, DC. Fresh interest rate cuts may be needed to shore up US economic growth amid a protracted housing slump and financial market turmoil, Bernanke said Thursday. [Agencies]

Bernanke cited several factors, including higher oil prices, lower stock prices and falling home values, that he said were bound to hurt consumer spending this year.

"In light of recent changes in the outlook for and the risks to growth, additional policy easing may be necessary," Bernanke told an event sponsored by two finance groups.

"We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks," he said.

Analysts welcomed Bernanke's forthright acknowledgment of the dangers faced by the US economy, which some fear may have already slipped into recession.

"I think he's come to terms with the fact that while inflation may be a concern down the road, he has to take care of the train that's coming at him right now, which is the fear of a recession," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore, Maryland.

Bernanke cautioned that conditions can change quickly.

That meant the Fed "must remain exceptionally alert and flexible, prepared to act in a decisive and timely manner and, in particular, to counter any adverse dynamics that might threaten economic or financial stability."

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