In a dramatic change of tone US Federal Reserve chairman Ben Bernanke has indicated that the Federal Reserve is ready to cut interest rates aggressively to ward off the risk of a US recession. Financial Times

He said: 'We stand ready to take substantive additional action as needed to support growth and to provide additional insurance against downside risks.'

His decisive language – which gave an immediate boost to stocks – represents a new message from the Fed, which as recently as December emphasised the uncertainty surrounding the economic outlook.

It is a clear sign that the Fed expects to cut rates by 50 basis points at its policy meeting this month.