KUALA LUMPUR: The US Federal Reserve, European Central Banks and four other central banks lowered their interest rates on Wednesday in an unprecedented move to ease the economic effects of the financial crisis.
“The Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1.5%.
"The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures,” it said in a statement posted on its website. The Fed said the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank were on Wednesday announcing reductions in policy interest rates.
The Bank of Japan had also expressed its strong support of these policy actions.
On the US interest rate cut, the Fed said incoming economic data suggested that the pace of economic activity has slowed markedly in recent months.
Moreover, the intensification of financial market turmoil was likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.
“Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation,” it said.
The Star
“The Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1.5%.
"The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures,” it said in a statement posted on its website. The Fed said the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank were on Wednesday announcing reductions in policy interest rates.
The Bank of Japan had also expressed its strong support of these policy actions.
On the US interest rate cut, the Fed said incoming economic data suggested that the pace of economic activity has slowed markedly in recent months.
Moreover, the intensification of financial market turmoil was likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.
“Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation,” it said.
The Star
Comments
We still need to be cautious all the time