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Central banks make emergency rate cuts |
Baja Real Estate & Economy News
 LONDON, England (CNN) -- The world's leading economies, led by the United States and the UK, slashed interest rates Wednesday in an emergency move to tackle the global financial crisis after days of record-breaking stock market losses.
The U.S. Federal Reserve cut its main rate by a half percentage point, with the central banks of China, England, Sweden, Switzerland and the European Central Bank all following suit with other .
The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, the Bank of England cut its rate by half a point to 4.5 percent, while the European Central Bank dropped its rate to 3.75 percent.
"The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability," the Fed said.
Markets reacted cautiously to the development, trimming earlier losses but remaining relatively flat. Futures trading on Wall Street, where good news is badly-needed after a 500 point drop a day earlier, indicated a positive reception.
The coordinated measure followed UK's unveiling of an $87.4 billion rescue package for its battered banking system Wednesday and massive losses during Asian trading that saw Japan's Nikkei plummet more then 9 percent in its largest single-day decline ever.
There were widespread declines in Asia: Sydney's All Ordinaries index fell 4.96; Japan's Nikkei was down to another five-year low at 9.38 percent and Hong Kong's Hang Seng dropped 8.17 percent -- even as the territory announced it would lower interest rates a full percentage point.
In Jakarta, a 10.38 percent plunge on the Composite index resulted in markets being slowed to halt the decline. Other falls included South Korea's KOSPI at 5.81 percent, the Taipei Weighted at 5.76 percent.
"Investors are now afraid that the world is going to enter a depression," said Jesper Koll with Tantallon Capital Research in Tokyo.
Europe appeared to be following suit, with Russia's major markets off more than 10 percent before trading was suspended -- now a regular occurrence -- and other indices dropping substantially.
London's FTSE index recorded early losses, with banking shares rallying on news that the British Treasury was making £25 billion available to major financial institutions with another £25 billion available if needed.
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