New voter surge in early voting could sway battleground states in 2024 US presidential election    Civil Defense urges caution amid forecast of heavy rain to hit most Saudi regions until Monday    What's in it for FinTech startups in events like Biban24    Al Nassr and Al Hilal share points in intense Riyadh Derby draw    ImpaQ: Riyadh to host first Impact Makers Forum in December    Saudi Arabia ranks 12th globally in international visitor spending in 2023    SFDA chief discusses investment opportunities in food and pharmaceutical sectors with Chinese companies    Riyadh's Sports Boulevard receives Platinum ActiveScore certifications    Saudi Arabia refutes claims of rising worker fatalities, highlighting low work-related death rates    US says around 8,000 troops from North Korea are stationed in Russia's Kursk region    Spain mourns as death toll passes 150 in catastrophic floods    Seven killed in Israel in deadliest Hezbollah rocket strikes in months    Cyclists on phones face jail under Japan's new traffic laws    Hidden sugars in Asia's baby food spark concerns    Saleh Al Shehri strike seals Al Ittihad's Sea Derby win over Al Ahli    HONOR unveils pre-order of the stunning HONOR MagicBook Art 14 Featuring an ultra-slim design, HONOR Eye Comfort Display and AI Cross-OS WorkStation    Derby Week makes its debut in the Roshn Saudi League    Al Nassr eliminated from King's Cup after a defeat to Al Taawoun    Teri Garr, Young Frankenstein and Tootsie star, dies at 79    Indonesia Days event celebrates cultural diversity at Al Suwaidi Park    India puts blockbuster Pakistani film on hold    The Vikings and the Islamic world    Filipino pilgrim's incredible evolution from an enemy of Islam to its staunch advocate    Muted Eid celebrations for millions of Nigerian Muslims    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



European, British central banks cut rates
Published in The Saudi Gazette on 07 - 11 - 2008

The European Central Bank cut its key interest rate by half a percentage point to 3.25 percent on Thursday and the Bank of England made an even more aggressive reduction of 1.5 percentage point in an effort to ease the financial crisis and boost their flagging economies.
The Bank of England's cut to a 3 percent base rate - the biggest trim in 27 years - took markets by surprise, reflecting fears Britain is headed for a deep recession.
ECB president Jean-Claude Trichet said the central bank to the 15-country euro zone had discussed a bigger, three-quarter point rate cut but “after having checked and discussed the pros and cons of those different options, we decided unanimously that it was appropriate to decrease by 50 basis points,” or a half percentage point.
Trichet said the decision to lower its rate was made in light of inflation that, while still above its preferred level of at or about 2 percent, had shown signs of slackening.
“It has been steadily declining since July, falling ... to 3.2 percent in October from 3.6 percent in September and 3.8 in August,” he said, explaining the bank's decision.
The ECB's main mission is to keep inflation in check but cut its rates for the second time in less than a month in light of the financial crisis.
Lower rates stimulate growth but can worsen inflation if done at the wrong time.
Trichet said the unanimous decision was made “amid the intensification and broadening of the financial market turmoil” that “is likely to dampen global and euro area demand for a rather protracted period of time.” Others banks followed suit. The Swiss National Bank cut its key interest rate by half a percentage point to 2 percent, only its second reduction since March 2003.
In Prague, the Czech Republic's central bank cut its interest rate by three-quarter percentage point to 2.75 percent.
The BoE and ECB, which followed the Fed and other banks in a coordinated cut on Oct. 8, have been criticized in some quarters for being slow to respond to the sharp economic slowdown this year amid fears about inflation. The ECB actually raised rates a quarter-point in July as inflation spiked sharply higher.
The ECB decision drew plaudits from one analyst, although some investors were disappointed the bank did not join its British counterpart in a bigger cut.
“This decision comes at the right moment. It gives a positive signal to financial markets, which are slowly regaining confidence as clearly indicated by the falling short-term commercial lending rates,” said Gerhard Huemer, director for economic fiscal policy of the European craft and employers' organization.
“Cutting interest rates before would not have helped over-dried and hyper-cautious markets - leaving rates untouched today, on the other hand, would have been the wrong signal to give to a debilitated economy.”
Those inflation concerns, though, have eased, not least because oil prices have fallen by more than half from their July highs of around $147 a barrel - and growth prospects have diminished sharply.
The European Commission forecast Monday that the economy in the 15 countries that use the euro will barely grow next year, expanding just 0.1 percent, with Germany, France and Italy stagnant. And it said Britain's economy will slump by 1 percent next year.
Many analysts suspected the Bank of England might go for a bold move, given that British interest rates had been at a relatively higher level and mortgage lenders have been slow to pass on previous rate cuts in full to hard-pressed homeowners and consumers.
“With recent economic data so poor, the market was already expecting a big move from the MPC but a cut of this size shows we've entered uncharted territory,” said Royal London Asset Management economist Ian Kernohan. “Small cuts are not appropriate when the economy is slowing so fast and the MPC was right to be bold.”


Clic here to read the story from its source.