Tip:
Highlight text to annotate it
X
(Image source: RankBanks.org)
BY FERDOUS AL-FARUQUE
Two major central banks cut interest rates while another increased government bond holdings
by 15 percent Thursday amid concerns the global economic crisis isn’t getting any better.
Bloomberg reports:
“In a 45-minute span, the European Central Bank and People’s Bank of China cut their
benchmark borrowing costs, while the Bank of England raised the size of its asset-purchase
program.”
The measures are meant to make it more enticing for investors to borrow money and boost economic
growth. The New York Times says what’s most interesting is all those moves were uncoordinated,
and goes on to say:
“The actions once again cast central bankers in the role of primary responders to the global
economic malaise, aiming at the same basic goal that they have tried to hit repeatedly
over the last six years: encouraging people and businesses to borrow and spend and take
greater risks with their investments.”
According to The Wall Street Journal, the European Central Bank cut a short-term lending
rate to a record low of 0.75 percent, the People's Bank of China said it would cut a
one-year yuan lending rate to 6 percent and the Bank of England increased a bond-buying
program to $582 billion in an effort to drive down long-term interest rates. The Journal
also says:
“The actions on Thursday turned the spotlight to the Federal Reserve, which has signaled
it could launch new measures if U.S. economic growth flags. A U.S. jobs report due Friday
could indicate whether the employment picture has sagged enough to convince Fed officials
to begin a new round of bond buying known as quantitative easing.”
Lee Munson, an analyst on CNBC, predicts if new U.S. jobs numbers go over 100,000, the
markets will rally but:
Munson: “If we go lower than 100, maybe below 90, I think there’s a high chance
we’re going to get some form of quantitative easing. I don’t like it any more than you
but I think the Fed’s going to fall in line with the other guys.”
And if you want to know more about how various central banks have manipulated interest rates
since 2004, check out this interactive map the Wall Street Journal has created, a link
to which can be found in the transcript below.