The world's major central bank to cut interest rates

The world's major economies, the central bank to take the rare action of the uniform: cut interest rates.

October 8, the Federal Reserve, European Central Bank, Bank of China, Bank of England, such as the world's major economies, the central bank issued a statement to lower the benchmark interest rate. U.S. Federal Reserve, European Central Bank, the Bank of England to cut interest rates by 50 basis points, and so on; China to cut interest rates 27 basis points and announced the suspension of interest tax.

A day earlier, the Bank of Australia has taken a move to cut interest rates. Oct. 7, the Reserve Bank of Australia announced that the lower the benchmark interest rate from 7% to 6%, far more than the market expected rate of 0.5 percent point, which is Australia since 1992, the biggest drop since the recession.

In the credit crisis has hit financial markets and real economy has begun to spread, a collective move to cut interest rates or be regarded as the world's major central banks join hands to save the economy of the latest efforts.

The unprecedented joint operation

"If we allow the development of the crisis, would have caused a lot of macro-economic impact", on October 7, Federal Reserve Chairman Ben Bernanke said. Bo Kenan said, with the recent economic data and financial market developments show that the deterioration of the prospects for economic growth, inflation and the prospect of a slight turn for the better, "the need to reconsider the current monetary policy is appropriate." Suggesting the Federal Reserve will cut interest rates in the near future.

One day later, on October 8, the Federal Reserve will cut benchmark interest rates by 50 basis points, from 2% to 1.5%. At the same time, and so increase the discount rate was lowered. In a statement, the Fed said, "In the light of the evidence that the economic downturn may be increased to reduce inflationary pressures, the Committee to take this action."

The Fed also said that the central bank of the world, "continued close consultations and make joint efforts with the unprecedented joint action to resolve the financial market liquidity problems."

This statement is true.

On the same day, has previously insisted the European Central Bank to cut interest rates will cut the benchmark interest rate by 50 basis points from 4.25 percent down to 3.75%; Bank of England will cut interest rates from 5% a 50 basis points to 4.5 percent, which is this year 3 On the first time since the Bank of England cut the benchmark interest rate.

8 People's Bank of China will also be a one-year yuan deposit and loan interest rates down the 27 basis points; and the Hong Kong Monetary Authority also cut interest rates 100 basis points.

In addition, Switzerland, Sweden, the Bank of Canada are also carried out a similar adjustment of interest rates.

On the same day, European indexes opened lower, interest rate cuts after the news was announced after the red. Financial Times, London FTSE 100 index was down 6% from the original pick-up up to 0.15 percent; Frankfurt DAX index fell from 8% down to 4.2 percent rebound. The Dow Jones industrial average time for the deadline 9447.11 points, down 508.39 points.

The SSE Composite Index also fell 3.04 percent today.

Adjust the interest rate on the market and the macro-economic impact of a longer period of time needed to test.

Has already cut interest rates bodes well

The world's central bank announced the rate cut to uniform, so that an unprecedented number of cases of people a bit of a surprise. However, due to the credit crisis in financial markets to deteriorate, as well as the United States, the European Union and other major economies are faced with a growing threat of recession, the forecast rate cut has long been a matter of fact it is not unexpected.

In addition to the U.S. Federal Reserve Chairman Ben Bernanke sent a strong hint that before, the rapid escalation of the crisis in the credit outlook for the next, after the European Central Bank has a track record has also begun to show a softening of attitude.

7, Quaden said that members of the European Central Bank to consider the current situation, the European Central Bank has changed its position, "interest rate cuts is no longer impossible."

Research also generally expected to cut interest rates. "I think a lot of countries, the central bank over the next period of time will make the decision to cut interest rates, and in accordance with the current situation, the European Central Bank is likely to cut interest rates in November with" the London-based Capital Economic macro-economic research institutes Economist Ben May, said earlier.

Prior to the Center for European Policy Studies (CEPS) of Deniel Gros told our reporter also said that the European Central Bank would cut interest rates, the timing and rate cut is still difficult to determine, but right now the stability of financial markets without delay, if it does not cut it Surprised.

"Technically, recession in Europe may have access", Ben May said, "Of course, this crisis will be a significant impact on the real economy, but also the extent of unknowable effects." Him in an earlier interview with our reporter said , Taking into account Europe's financial markets in recent difficulties, in addition to the Bank of England this week to allocate up to 50,000,000,000 pounds to the difficulty of the investment bank should be there will be other moves, "to cut interest rates by 50 basis points? Who knows."

In addition, on October 7 Australia has announced to cut interest rates by one percentage point to 6%.

Japan to maintain interest rates

Bank of Japan's absence was not surprising.

The evening of October 7, the Bank of Japan governor Shirakawa Fang-ming has been clear at a news conference to deny the possible rate cut and said: "The individual involved is not appropriate for the country's economic situation and price policy coordination would be happy to see the situation . " But the Fed statement said the Bank of Japan to the world's central banks to cut interest rates to express "strong support."

Japan Institute for Advanced Research Institute of Economy, Trade and Industry small Ichiro Lin told reporters that Japan's major industrial nations closest to the zero interest rate, and almost no room to cut interest rates, the central bank decision was not unexpected.

Barclays chief Japan economic analysis of Jurists Kyohei Morita said in the release of only three signals as the premise, the central bank will it be possible to make a decision to cut interest rates. The three signals are, first of all, the central bank needs to adjust to the economic growth will be returned to the track, the other to stop the risk of rising inflation concerns, in addition to the need to abandon the "lenient policy may result in fluctuations in the economy." He believes the central bank in these economic issues do not change the aperture, the rate cut will not be carried out.

"The key interest rate at the moment is not a problem," Ichiro said Lin small, "regardless of how the current top priority is to solve the liquidity problem."

Waseda University professor of economics and Lin Hua-sheng also told reporters that "Japan's interest rate is only 0.5 percent, down 25 basis points would not be, is still inject liquidity more effectively."

Nikkei in the central bank announced to maintain the level of interest rates after the more experienced substantial decline below 7 million mark for points, 8 crash is 9.4 percent, a record since the 1987's the largest one-day decline.

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