The Federal Reserve, the Bank of England and the European Central Bank led a coordinated rate cut effort as the official response to the biggest financial crisis since the Great Depression gathers steam. The official response in Europe and the U.S. has really stepped up. The U.S. central bank intervening in the Commercial paper market to lend directly to non-financial companies. The British government has decided to nationalise its banking system with targeted capital injections. And European governments have made sweeping deposit guarantees.
The only question is will this stem the tide? The monetary authorities certainly are taking aggressive action.
The Fed cut its benchmark rate by a half point to 1.5 pc, the central bank said in a statement. The ECB and central banks of the U.K., Canada, Sweden and Switzerland are also reducing rates, the Fed added.
“The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability,” according to a joint statement by the central banks. “Some easing of global monetary conditions is therefore warranted.”
The move comes as the turmoil in financial markets deepens and the UK today unveiled a £500bn rescue package for the country’s banking sector.
–The Telegraph
Sources
Federal Reserve, ECB and Bank of England make emergency interest rate cuts – Telegraph
Fed leads global coordinated rate cut, eases by half point – Yahoo
Central banks make emergency rate cuts – Times Online
Central banks cut rates to stem financial crisis – Reuters