Financial crisis - Guarantee legislation

The decision of the European Central Bank, the Bank of England and the US Federal Reserve to cut interest rates is to be warmly welcomed. Other banks have followed suit, including the Bank of China, Bank of Japan, and Swiss National Bank.

The move is a determined attempt to stop the financial crisis, which has led to a serious loss of confidence in financial markets and institutions on a global scale.

The weakening of economic activity has led to a reduction in inflationary pressure. So the conventional financial thinking is that interest rates can be cut to stimulate economic activity and thereby ultimately help stop the slide without the fear of triggering inflation.