Central banks co-ordinate rate cuts 50 basis point

October 8, 2008 11:28 a.m.

The Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the central bank of Switzerland, the Bank of China and the Sverige Riksbank have all joined the Australian central bank in cutting interest rates. The Aussies cut the rates by one percentage point and the other banks by half a percentage point.This is good news. Further rate cuts will follow in the coming months.
In addition the U.K. Government has invested 50 billion dollars into buying shares in the British banks as a means of injecting liquidity into them. Yesterday and overnight stock markets fell by large amounts particularly in Asia this morning they are down but not by nearly as much. So it will take a bit of time for this co-ordinated easing of rates to have its positive effect but the impact over time will be   quite positive, particularly if it is accompaned by increased fiscal stimulus.

On the oilfront NYMEX oil was priced at just over $87   barrel while Brent crude was trading at just over $82 a barrel. So inflationary pressure is nil.

Extraordinary events such as we have witnessed over the past week require extraordinary measures. These necessary measures are beginning to happen.