World banks unite in rate cuts

Central banks across the world co-ordinated emergency rate cuts in an attempt to stem market chaos today.

The European Central Bank, the Bank of England, the US Federal Reserve, Sweden's Riksbank, The Swiss National Bank, and the Bank of Canada all cut interest rates by half a percent.

Ireland's Central Bank said: "The coordinated interest rate reductions by central banks around the world today, including the Eurosystem of which we are part, are aimed at addressing the lack of confidence globally in financial markets and institutions."

Central Bank governor John Hurley said: "Domestically, at a time of weakness in the Irish economy, the 50 basis point reduction in interest rates today should help to reduce business costs, ease the repayment burden on mortgage holders, encourage investment and reduce strains in the financial markets."

The ECB's benchmark rate dropped to 3.75%, the Bank of England’s rate became 4.5%.

At the same time, the US Federal Reserve cut its key interest rate to 1.5%, reviving a rate-cutting campaign that had been halted in June out of concerns that those low rates would worsen inflation.

The move caused stock markets around the globe to rally.

China also cut its key interest rates for a second time in less than a month to stimulate slowing economic growth.

The cuts came after markets in Asia and Europe sank amid waning confidence and Russia closed its main stock market for two days.

The hope was to spur nervous consumers and businesses to spend more freely again.

They took fright last month as housing, credit and financial problems intensified, throwing world markets into chaos.