US rate cut looms as Fed chief fails to calm market jitters

· Property correction may be harsher than expected
· Retail spending seems solid and investment is up

Larry Elliott, economics editor
Thursday March 29, 2007
The Guardian

The prospect of an early cut in US interest rates loomed larger last night after the head of America's central bank failed to convince a jittery Wall Street that the world's largest economy could withstand rising oil prices and a weak housing market.

Shares and the dollar came under pressure after Ben Bernanke, chairman of the Federal Reserve, admitted that the correction in the US real estate sector "could turn out to be more severe than we expect".