Ben Bernanke, Federal Reserve chairman, on Tuesday opened the door to possible interest rate cuts after the central bank announced it would buy short-term debt from banks and corporations in an unprecedented attempt to unfreeze money markets.

Mr Bernanke indicated that lower interest rates could be necessary, saying the Fed would “need to consider whether the current stance of policy remains appropriate”. He stopped short of explicitly signalling that rates would be cut below the present level of 2 per cent.