"I think there is a very strong possibility that we will be growing at the end of the year. We will have stronger growth at the end of the year than we have right now," he said during a press conference after talks with his British counterpart Alistair Darling.

Paulson and Darling had earlier discussed ongoing financial turmoil, which has largely been caused by the credit crunch and soaring oil prices.

"There's no doubt that high headline inflation numbers as it relates to oil and food prices are a real concern to Americans," Paulson told BBC radio on Thursday.

"My biggest focus today is on the downside risks which are housing, oil prices, and obviously what's going on in the capital markets," he added.

Darling said that international cooperation was the key to protecting financial markets in the future.

"We've got make sure that the regulatory system is tightened up," said Britain's finance minister.

Darling said international solutions were necessary because many of the problems afflicting markets were international.

"Whether its the credit crunch or inflation -- those are international problems," he said.

Oil prices on Thursday set record highs above 146 dollars a barrel owing to falling reserves of US crude, simmering tensions over Iran and a weak dollar, traders said.

- Dow Jones Newswires contributed to this story -

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