A number of central banks around the world have cut interest rates in a coordinated effort to try and prevent the global credit crisis from getting worse.
The Bank of Canada, the Bank of England, the European Central Bank, the United States Federal Reserve, Sweden’s Sveriges Riksbank and the Swiss National Bank all cut interest rates by 50 basis points on Wednesday.
The Bank of Japan, with its benchmark rate at 0.5%, did not cut its rate, but expressed its support of these actions.
The intensification of the global financial crisis is having a marked impact on all countries, according to the Bank of Canada. In recent weeks conditions in global financial markets have deteriorated sharply, the U.S. economy has weakened further, and commodity prices have fallen abruptly.
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Below-potential growth in aggregate demand through 2009, combined with a lower profile for commodity prices, will significantly ease inflation pressures in Canada.
“In view of these developments, the Bank of Canada decided to join other major central banks and lower its target for the overnight rate by 50 basis points today,” says a statement from the Bank of Canada. “This action will provide timely and significant support to the Canadian economy.”
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