Major Central Banks Co-ordinate Rate Cuts
8 October 2008
Major Central Banks cut interest rates by 0.50% at 12.00 (BST) today in a co-ordinated effort to stem the unprecedented financial turmoil. After a special emergency meeting held on Wednesday the 8th October, The US Federal Reserve, Bank of England, European Central Bank, Bank of Canada, Sveriges Riksbank, and the Swiss National Bank all cut their respective benchmark borrowing rates to soothe the current financial fallout.
After that meeting, the Bank of England released the following statement:
“Throughout the current financial crisis, Central Banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets.
Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. 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.
Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions” (Though not really having the room to cut further).
The Bank of England will not be taking any further action on Thursday’s scheduled interest rate announcement, but there seems to be little doubt that there will be additional monetary policy easing across the globe in the coming months, from the Bank of England and others.