The US Federal Reserve was accused today of acting recklessly with its dramatic slashing of interest rates, with one senior delegate at the World EconomicForum in Davos saying it risked igniting a fresh bubble.

Amid cautious support for the Fed's action yesterday among business leaders gathered in the mountain resort, Stephen Roach, the head of Asia for the US investment bank Morgan Stanley, struck a more critical note, saying he was astonished that the Fed had let itself be goaded into action by a market panic.

“We have a market-friendly Fed possibly injecting a lot of liquidity in the system which will set us up for another bubble economy. I’m sort of worried that all they did yesterday was to hit the snooze button,” he said.

“[This is] excessive monetary accommodation that just takes us from bubble to bubble to bubble.”

John Studzinski, the former HSBC banker now working for the private equity group Blackstone, called for better leadership from policymakers.

He said: “The thing that markets are desperate for right now is leadership — whether globally or regionally — and it seems this is lacking.

“Until the markets see a lot more leadership on a proactive basis rather than a reactive basis you are going to continue to feel this great anxiety and feel this frustration.”

Other business leaders argued that the fears of a global economic slowdown were either overdone or would not seriously slow their own firms.

Indra Nooyi, the chief executive of PepsiCo, said, “In many ways we are countercyclical and it helps us either way, whether the market is up or down.”

Ms Nooyi said that rising commodity prices were a challenge but the fizzy drinks and food group had the levers to overcome the challenge.

She said: “How do we intelligently navigate through this? Through a mix of productivity, pricing and intelligent procurement ...While we are concerned about commodity inflation, we feel pretty comfortable that we will find a way through it.”

Louis D’Ambrosio, the chief executive of the US communications equipment company Avaya, said of the economic situation: “I do not think it is as bad as some make it out to be ... For example, we are not seeing a dramatic change in capital spending right now in the US.

"Clearly, it’s most pronounced in the banking area ... but if you look more broadly, globally ... you are not seeing the same impact people are writing about."

Martin Sorrell, the chief executive of UK advertising agency group WPP, was also sanguine.

He said: “We remain of the view that 2008 will not be the toughest year. It will probably be as good as 2007 or maybe even better. The real issue will be in ’09.”

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