Ladies and gentlemen, today marks an important date in history. The world’s major central banks acted in concert to lower their key interest rates in an effort to ameliorate this global financial crisis. It doesn’t get any more clear than this – we are in deep financial muck and the world’s major central banks are doing everything possible to avoid a drastic decrease in global economic growth. Whether this move will have the desired effect of turning the global economy around is anyone’s guess. One sure-fire effect that it will have is to accelerate inflation. The way I see it, the problem for central bankers is which economic issue to put greater emphasis on; the need to fight inflation or the need to prevent a major decline in economic growth. I think they are definitely stuck between a rock and a hard place, as the cliche goes. The way I see it, the Federal Reserve is now spending its time fighting the collapse of an asset bubble that IT has created! This is the height of absurdity. We are now back in the vein of easy money a la Alan Greenspan. Thanks to Alan’s Greenspan’s easy money policy a while back the housing bubble got created and grew to gigantic proportions, and now under Ben Bernanke’s management the Federal Reserve is trying to combat this problem by doing more of the same thing which caused it! Am I the only one here who find this utterly insane?
Anyways, before I go off on a rant here, check out the new updated central bank interest rates.
Here is a summary of the new interest rates:
Canada – 2.50% (previously3.0%)
Switzerland – 2.50% (previously 2.75%)
European Union – 3.75% (previously 4.25%)
United Kingdom – 4.50% (previously 5.0%)
United States – 1.50% (previously 2.0%)
Here is the official news release from the Associated Press:
By JEANNINE AVERSA, Associated Press Economic Writer
WASHINGTON – The Federal Reserve and six other major central banks from around the world slashed interest rates Wednesday in an attempt to prevent a mushrooming financial crisis from becoming a global economic meltdown.
The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent.
Also cutting rates were the central banks of China, Canada, Sweden, and Switzerland. The Bank of Japan said it strongly supported the actions.