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Fed and six other central banks slash interest rates
The US Federal Reserve, together with six other major central banks from around the world, slashed interest rates Wednesday to cope with the current financial crisis.
The U.S. central bank decided to lower its target for the federal funds rate 50 basis points to 1.5 percent. It took the action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures, the Fed said in a statement.
In Europe, the Bank of England slashed its rate by half a point to 4.5 percent and the European Central Bank cut its rate by half a point to 3.75 percent.
The central banks of China, Canada, Sweden, and Switzerland also took similar actions. The Bank of Japan said it strongly supported these policy actions.
"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," said the central banks in a joint statement.
"Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices," they noted, "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," said the central banks.
The global stock markets tumbled Tuesday amid increasing anxiety in global financial markets.
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