Ben Bernanke gave warning today that the US trade gap is unsustainable in a speech that studiously avoided addressing the recent turmoil in the financial markets.

The chairman of the Federal Reserve told an audience in Germany that the US trade gap was “counterproductive” and should be reduced gradually.

Mr Bernanke said: “Although the US current account deficit is certainly not sustainable at its current level, US liabilities to foreigners are not, at this point, putting an exceptionally large burden on the American economy.”

The remarks will not alter economists’ views that the Fed will cut US interest rates in a week’s time.

Most analysts expect at least a quarter-percentage point cut, with a half percentage point seen as a possibility.

Mr Bernanke’s comments followed figures that showed that the US trade deficit narrowed in July as record exports of farm goods, cars and other products offset a big jump in foreign oil prices.

The better-than-expected figures come amid fears that the US risks tipping into recession after the recent release of abysmal jobs data, in the wake of a crisis in the nation’s housing markets.

The Commerce Department said that the US trade deficit edged down 0.3 per cent in July to $59.2 billion (£29.1 million), compared with $59.4 billion in June.

Economists had expected a slight increase. However, they noted that initial deficit figures for the past two months have subsequently revised higher.

Mr Bernanke also used his speech to argue that the current account imbalances feed a greater the risk of having the world become satiated with dollars.

“Earlier reduction of global imbalances would reduce the potential strains associated with financing a large quantity of international liabilities and likely allow a smoother adjustment in financial markets,” he said.

The US trade deficit narrowed in July as record exports of farm goods, cars and other products offset a big jump in foreign oil prices.

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