Global General

Special

Newsmaker

Asia Pacific

America

Middle East

Europe

Africa

Fed set to cut rates, others poised to follow

(Agencies)
Updated: 2008-10-29 19:32

LONDON -- The United States is expected to cut interest rates on Wednesday, a measure Japan, the European Central Bank and Britain are forecast to follow by the end of next week to bolster economies facing recession.

While dispensing with a repeat of the coordinated cuts made earlier this month, authorities fear the worst financial crisis in 80 years will usher in a long recession and are looking to individual rate reductions to soften the blow.

A woman walks past a stock quotation board displaying the Nikkei share average outside a brokerage in Tokyo October 28, 2008. [Agencies]

Hungary became the latest country to seek finance from global lenders, agreeing a rescue package worth US$25.1 billion to shore up its currency and markets.

The International Monetary Fund said if the crisis was prolonged and many more countries asked for help, it could need more money.

The Federal Reserve is widely expected to cut US rates by at least half a point to 1 percent, the lowest level since June 2004.

Related readings:  US Fed poised to cut rates again China cuts taxes, rates to boost housing market  Interest rates slashed, but Wall Street lose again  Rates cut to ward off slowdown

Norway's central bank was also seen reducing rates by 50 basis points to 4.75 percent on Wednesday.

"The picture is now so depressing that Norges Bank has to do whatever it can to decrease rates ... as quickly as possible," said Inge Furre, economist at Sparebanken Moere.

The Bank of Japan will consider cutting rates at a policy meeting on Friday but will watch market conditions before deciding, a source with knowledge of the matter told Reuters.

Bets on a quarter-point cut to 0.25 percent reversed a recent surge in the yen, which has hurt exporters and helped force Japanese shares lower.

COOPERATION

A cut by the world's second biggest economy would "send a message to the world that Japan is cooperating with other nations in tackling the financial crisis," said Koichi Haji, chief economist at NLI Research Institute in Tokyo.

The European Central Bank and the Bank of England are expected to ease policy at their regular meetings next week.

Falling oil and food prices probably helped to cool German inflation for the third month in a row in October, giving the ECB added scope to cut the rate.

An executive board member of the European Central Bank said growth in the Euro zone would be lower than expected.

"Confidence will not return until we stop to think about the measures which have been taken and we can see financial institutions resuming their normal activity," Jose Manuel Gonzalez Paramo said in a newspaper interview.

   Previous page 1 2 Next Page  

   Previous page 1 2 Next Page