6 central banks, including Fed, ECB, cut interest rates

WASHINGTON, Oct. 8 Kyodo - The U.S. Federal Reserve, the European Central Bank and four other central
banks in Europe and Canada said Wednesday they have decided to cut interest
rates in a coordinated action amid the global financial crisis.

The Fed said it decided to lower its key short-term target rate by 0.5
percentage point to 1.5 percent. The other four countries participating in the
coordinated interest rate cuts are Britain, Canada, Sweden and Switzerland.
The ECB said it will lower the key interest rate by 0.5 percentage point to
3.75 percent, while the Bank of England said it will trim its benchmark
interest rate by 0.5 percentage point to 4.5 percent.
The six central banks and the Bank of Japan said in a joint statement, ''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.''
At the same time, they noted that inflationary pressures have ''started to
moderate in a number of countries, partly reflecting a marked decline in energy
and other commodity prices.''
''Some easing of global monetary conditions is therefore warranted.
Accordingly, the Bank of Canada, the Bank of England, the ECB, the Fed,
Svergiges Riksbank and the Swiss National Bank are today announcing reductions
in policy interest rates,'' they said.
The BOJ, which has maintained its key interest rate at 0.5 percent for about
two and a half years -- the lowest level among key industrial countries -- will
not join in the cuts but expressed support for the coordinated move by the six
central banks.
It also pledged to ''continue to do its best to secure the stability of
financial markets through money market operations while staying in close
cooperation with other central banks.''
The Fed said in a separate statement that the pace of the U.S. economic
activity ''has slowed markedly in recent months'' and the intensification of
financial market turmoil ''is likely to exert additional restraint on spending,
partly by further reducing the ability of households and businesses to obtain
credit.''
The announcement by the six central banks came two days ahead of a Group of
Seven meeting of financial chiefs in Washington. Market players are closely
watching whether finance ministers and central banks from the seven major
economies will be able to strike any accord to quell the current turbulence in
the global financial markets.
Also on Wednesday, the People's Bank of China said in a statement on its
website that its one-year loan rate will be reduced by 0.27 percentage point
from Thursday.
The credit easing by China was apparently made in line with the move by the six
central banks in the United States, Canada and Europe.