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%.
“It’s the race to zero,” one London economist said. “There’s no obstacle to more rate cuts.” As the crisis deepens, free money is becoming a more realistic possibility across the globe. A combination of reluctant spenders and cautious banks has created unparalleled stagnation; central banks hope deeper cuts convince banks to pass lower rates on to consumers. (Read more financial crisis stories.)