Europe, China Lower Rates In Urgent Effort To Spur Recovery

Central banks around the world took major steps Thursday to stave off fears of global recession, with the European Central Bank slashing interest rates, China unexpectedly cutting bank lending rates and the Bank of England pumping billions of pounds into Britain’s stimulus program, The Washington Post reported. The measures reflect a growing sense of international urgency about faltering economies and underline the continued power of central banks to take unilateral measures to fight the crisis, even as elected policymakers haggle over their own long-term responses. But in Europe, concerns grew that the ECB was reaching the limits of its capacity to head off catastrophe through ordinary policymaking means. Should the crisis worsen, the bank appears to have few tools ready to do more on a short-term basis. The bank announced that it was reducing its benchmark interest rates to a record low 0.75 percent, down from 1 percent — a move that will make borrowing cheaper and could stimulate the sputtering national economies that share the euro currency. “The risks surrounding the economic outlook for the euro area continue to be on the downside,” ECB President Mario Draghi said at a news conference in Frankfurt. Some of those risks “have materialized,” he added. Read more. (Subscription required.)