United States Federal Reserve Chairman Ben Bernanke. - AP

United States Federal Reserve Chairman Ben Bernanke, under fire from some for being slow to stamp out a smouldering credit crisis, takes the stage before global policymakers on Friday in a test of his leadership with financial market worry at a fever pitch.

Against a backdrop of rising foreclosures and fear of a financial domino effect from failing hedge funds, one of the most closely watched speeches of his chairmanship may be used to signal a willingness to cut interest rates to shield the economy from financial turmoil.

However, he will also be leery of rushing down the path of predecessor, former Chairman Alan Greenspan, who has been criticised for running to Wall Street's aid with interest-rate cuts.

Many have blamed the "Greenspan put" for fueling a housing boom in the early part of this decade and encouraging reckless risk-taking.

The annual monetary conference at the mountain retreat in Jackson Hole, Wyoming, generally provides a chance for global policy-makers to set aside day-to-day concerns for more scholarly exchanges.

The upheaval stemming from subprime mortgage turmoil raises the stakes for Bernanke to show he is sensitive to the stresses gripping world financial markets.

"The Fed is behind the curve and everybody on Wall Street knows it," CNBC television commentator Larry Kudlow said on Tuesday. "The handwriting is on the wall, and the Fed missed it."

Bernanke's remarks will be released at 10:00 a.m. EDT (1400 GMT) on Friday.

LONG SILENCE

"He hasn't spoken on the economy in about a month and a half, and it's clearly incumbent upon him to make some kind of statement," said James O'Sullivan, an economist for UBS in Stamford, Connecticut.

Not everyone is certain Bernanke will use the address to go beyond the published topic of the relationship between housing and monetary policy.

"We expect Bernanke to try avoiding any signals on current monetary policy," Lehman Brothers said in a commentary on Wednesday, barring renewed market disruptions which might force him to do so.

The Fed on August 17 acknowledged risks to growth had increased appreciably and lowered its discount rate, which it charges banks for loans, by a half-percentage point to 5.75 in a bid to restore credit flows, particularly in commercial paper markets.

The surprise move drew praise as a judicious, limited intervention, and appeared to have a calming effect. But skittishness lingers.

- Reuters