The Federal Reserve chairman highlighted the recent recovery in consumer spending and said there were "signs of bottoming" in the housing market.
Barack Obama enters his first real moment of global diplomacy in London on Wednesday with a paradox: he is the most popular US president in a generation but you would have to go back more than two generations to find one with fewer cards to play.
Global oil demand will collapse next year and commodities will not return to the highs they reached this summer in the foreseeable future, two authoritative reports said on Tuesday as they forecast a long and painful worldwide recession.
The developing world faces the sharpest slowdown in growth since the second world war, with growth plunging from 7.9 per cent in 2007 to only 4.5 per cent in 2009, the World Bank forecast on Tuesday.
The US Federal Reserve on Tuesday cut interests rates by 0.75 points from 3 per cent to 2.25 per cent. The cut initially disappointed markets which had risen sharply on hopes of a 1 percentage point cut. The decision was taken by eight votes to two. First quarter earnings at the two Wall Street firms fell less than analysts had expected, easing concerns about the state of the investment banking sector.
The risk of a collision between the Federal Reserve and the markets grew on Friday after Fed governor Randall Kroszner made it clear that the US central bank was not planning to cut interest rates at its next policy meeting, but was largely ignored by investors.
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