The Reserve Bank of India's surprise interest rate cut ended a week of reductions that spanned the globe from Beijing to Washington, with more to come next week in Europe and Australia. Economists forecast that the onset of a recession in Europe will force the ECB and the Bank of England to lower their benchmark rates on Nov. 6 by a half-point to 3.25 percent and 4 percent respectively. India's central bank pushed its repurchase rate down for the second time in two weeks, taking it to 7.5 percent from 8 percent. India reduced rates and also shrank the amount of deposits that lenders need to set aside as reserves by 1 percentage point to 5.5 percent. The Indian central bank's action on Saturday followed a Federal Reserve decision to reduce US borrowing costs to match the lowest level in a half-century. The Bank of Japan on Friday cut its benchmark rate for the first time in seven years and China pared its key rate for a third time in two months. Central banks in Norway, Slovakia, South Korea, Taiwan, Israel and across the Middle East also eased credit. Policy makers are fighting to avert a prolonged recession in the global economy as the credit crisis enters its 15th month and spreads beyond industrial countries. The People's Bank of China on Oct. 29 reduced its one-year lending rate after economic growth slowed to 9 percent in the third quarter from 11.9 percent in 2007 as export markets shrank. Elsewhere in Asia, South Korea slashed its rates by a record 75 basis points in an emergency shift and rates also fell in Taiwan and Hong Kong. Oil-producing nations are also resorting to lower rates after the price of crude dropped by half from a July record of $147.27 per barrel. Norway's central bank cut its benchmark by a half-percentage point for the second time last month. Saudi Arabia, Kuwait and Bahrain, which tend to shift their interest rates in line with the US to maintain currency pegs to the dollar, also followed the Fed in cutting. Not all central banks are easing. Iceland this week unexpectedly raised its main rate to 18 percent, the highest in at least seven years, as it battles a currency crisis and possible hyperinflation with the help of the International Monetary Fund. Central banks are going beyond interest-rate policy to confront the unprecedented crisis with unconventional measures. The Fed on Oct. 29 agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore to unfreeze money markets, the first time it has extended such measures to emerging nations. Meantime, the ECB gave Denmark access to 12 billion euros.
