Major central banks cut interest rates by half a percent

October 8th, 2008 - 7:49 pm ICT by IANS  

Frankfurt, Oct 8 (DPA) Major central banks jointly slashed interest rates Wednesday, with the European Central Bank (ECB) reducing its benchmark refinancing rate by 50 basis points to 3.75 percent. The banks acted after world stock markets plunged for a third straight day and ended weeks of resistance by the ECB to a cut.

Announcing the broad move among central banks to cut their policy rates and avert recession, the ECB said in Frankfurt it was satisfied the risk of inflation had diminished.

The minimum bid rate on the main refinancing operations of the Eurosystem was reduced to 3.75 percent, while a second interest rate on the marginal lending facility was down to 4.75 percent, also down 50 basis points.

The ECB’s rock-bottom interest rate for banks, on its deposit facility, will be reduced by 50 basis points to 2.75 percent.

The ECB said the other central banks involved were the Bank of Canada, the Bank of England, the US Federal Reserve, Sveriges Riksbank of Sweden and the Swiss National Bank.

“The Bank of Japan expresses its strong support of these policy actions,” the announcement added.

“Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability,” the ECB said in justification.

“Some easing of global monetary conditions is therefore warranted.” But it warned again against a wage-prices spiral.

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