Central banks around the world are cutting their key interest rates in
a coordinated attempt to head off a global recession.
The cuts come as the International Monetary Fund says the world economy
is entering a "major downturn," and faces the "most dangerous" shock in
mature financial markets since the 1930s. The U.S. Federal
Reserve announced its emergency rate cut early today (Wednesday).
said it is cutting the benchmark interest rate by half of one percent
to one-point-five percent because of a marked slowdown in economic
activity and a reduced threat of inflation.
The European Central Bank and central banks in Britain, Canada,
Switzerland, Sweden and China also said they are cutting their key
Officials hope lowering interest rates will help persuade banks
resume lending money, and ease a credit crunch that makes it difficult
for many businesses to operate.
U.S. Treasury Secretary Henry Paulson says another effort to ease
credit problems is getting under way quickly.
The government's 700
billion-dollar program to buy up bad assets from financial institutions
may have experts on staff by the end of the week, and may start making
purchases in a couple of weeks. REST OPT
Earlier Wednesday, the rate cut got a mixed greeting by investors. Key
European stock indexes fell in volatile trading, and were off five
percent or more at the close. U.S. stock market indexes swung widely,
and moved up around two percent in afternoon trading.