Fed Joins 5 Central Banks in Shock Rate Cut

US, EU, UK, others offer 50-point reduction to reverse diving markets

By Jason Farago, Newser Staff

Posted Oct 8, 2008 7:04 AM CDT

(Newser) – The Federal Reserve and five other central banks cut interest rates by 50 basis points in an emergency attempt to stem the economic effects of the credit crisis, reports Bloomberg. The move brings the American benchmark rate to just 1.5%, while the European Central Bank and the monetary authorities of the UK, Canada, Switzerland, and Sweden all joined in the action. China also cut rates by more than a quarter-point.

The Fed, whose board voted unanimously for the cut, said in a statement that "the intensification of financial market turmoil is likely to exert additional restraint on spending." While markets in Asia and Europe dove today, the coordinated action may help to reverse the falls. European markets pulled back after the announcement, and futures indexes in New York shot higher after a sharp downturn.

Fed Chairman Ben Bernanke is seen on a television screen on the New York Stock Exchange trading floor. The Fed and 5 other central banks cut rates by 50 basis points today. (AP Photo/Richard Drew)

Bank of England Governor, Mervyn King, arrives at 10 Downing Street in London for a meeting with Britain's Prime Minister Gordon Brown, and Chancellor of the Exchequer Alistair Darling, Tuesday Oct.... (AP Photo/Lewis Whyld/PA)

European Central Bank President Jean-Claude Trichet delivers a speech during the first World Policy Conference in Evian, French Alps, Tuesday, Oct. 7, 2008. (AP Photo/Laurent Cipriani)

Federal Reserve Chairman Ben Bernanke, speaks to the National Association for Business Economics, Tuesday, Oct. 7, 2008, in Washington. Bernanke warned that the financial crisis has not only darkened... (AP Photo/Manuel Balce Ceneta)

« Prev« Prev | Next »Next » Slideshow

To report an error on this story, notify our editors.

More Newser Stories

Central Banks Scramble to Feed Cash Into Markets

Biz slows as bailout talks stall

(NEWSER) - The world's central banks are frantically spraying money into the economy to prevent it from seizing up as the US bailout package stalls and confidence plummets, Reuters reports. The holdup in Washington has made edgy commercial banks even more inclined to hoard cash and not lend to each other—leaving central banks with little choice but to step in. More»

Central Banks Move to Ease Market Strains

Stock futures surge on the news

(NEWSER) - Central banks around the world plan to ease the strain on the global financial system by taking coordinated action to prevent a lack of liquidity, they announced in a statement this morning—news that sent stock futures soaring more than 250 points . The Bank of Canada, Bank of England, Bank of Japan, European Central Bank, and the Swiss National Bank join the Fed in the moves, which the AP reports will, as of next Monday, "reduce the cost of temporary dollar loans to banks—called liquidity swaps—by a half percentage point." NPR explains that'll make it easier for financial institutions to get cash, which they'll hopefully then lend at reduced interest rates. More»

'Race to Zero' Under Way as Central Banks Cut Rates

With Fed at 1% and European, Asian banks trimming, no-interest loans not far off, perhaps

(NEWSER) - Interest rates around the world are falling, with no end in sight as central banks hack away at obstacles to lending and try to jump-start their economies, Bloomberg reports. With the US rate at 1%, the Bank of England yesterday cut its key figure to 3%, the lowest since 1955, and the European Central Bank cut its rate by half a point, to 3.25%. More»

Fed Pours $200B Into Global Credit Relief Push

Central banks around the world try to ease liquidity problem

(NEWSER) - The Fed will inject huge quantities of cash into financial markets as part of a coordinated global attack on the credit crisis, Ben Bernanke announced today. The central bank will loan out another $200 billion, this time on a 28-day basis rather than overnight, the AP reports. The effort will coordinate with the European Central Bank and the central banks of Canada, England, and Switzerland. More»

Did Fed Freak With Emergency Rate Cut?

Decision smacks of panic—and worse trouble yet to come

(NEWSER) - Yesterday's steep interest rate cut—just a week ahead of a scheduled policy meeting—made the staid Federal Reserve come across as spooked and jumpy, leaving many to wonder if the Fed knows of worse news to come, Reuters' Ros Krasny writes. The surprise .75-point cut "is a declaration of a state of emergency for the US markets and the economy," a market strategist said. More»

NEWS FROM OUR PARTNERS

What is Newser?

Face it: there's too much news. At Newser, we choose the most thought-provoking and entertaining stories from hundreds of US and international sources and reduce them to a headline, picture, and two paragraphs. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »

Partnering with: Slate

View Newser on the mobile website

Fed Joins 5 Central Banks in Shock Rate Cut

US, EU, UK, others offer 50-point reduction to reverse diving markets

OTHER STORIES ON OUR RADAR

Federal Reserve • central bank • Asian markets • European Central Bank • credit crisis • European markets • Bank of England • interest rate cut

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Central Banks Scramble to Feed Cash Into Markets

Biz slows as bailout talks stall

Central Banks Move to Ease Market Strains

Stock futures surge on the news

'Race to Zero' Under Way as Central Banks Cut Rates

With Fed at 1% and European, Asian banks trimming, no-interest loans not far off, perhaps

Fed Pours $200B Into Global Credit Relief Push

Central banks around the world try to ease liquidity problem

Did Fed Freak With Emergency Rate Cut?

Decision smacks of panic—and worse trouble yet to come

About Us

Site

Newser By Users

Community

Site Maps

Tools

More News

What is Newser?

Fed Joins 5 Central Banks in Shock Rate Cut

US, EU, UK, others offer 50-point reduction to reverse diving markets

Bookmark & Share

OTHER STORIES ON OUR RADAR

Federal Reserve • central bank • Asian markets • European Central Bank • credit crisis • European markets • Bank of England • interest rate cut

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Central Banks Scramble to Feed Cash Into Markets

Biz slows as bailout talks stall

Central Banks Move to Ease Market Strains

Stock futures surge on the news

'Race to Zero' Under Way as Central Banks Cut Rates

With Fed at 1% and European, Asian banks trimming, no-interest loans not far off, perhaps

Fed Pours $200B Into Global Credit Relief Push

Central banks around the world try to ease liquidity problem

Did Fed Freak With Emergency Rate Cut?

Decision smacks of panic—and worse trouble yet to come

About Us

Site

Newser By Users

Community

Site Maps

Tools

More News

What is Newser?