Bank of England cuts interest rates to lowest in more than 300 years

The Bank of England has cut interest rates to the lowest level in its 315-year history as it desperately attempts to prevent the UK recession deepening into a slump.

The bank rate has been reduced by 0.5 percentage points to 1.5pc after recent economic data suggested that the UK is in store for a deep recession this year as the house price slide, unemployment rises and spending slows.

Related article:
Chancellor set to print more cash as interest rates hit record low (Times)
No plan to print money – Darling (BBC)
Bank Of England’s Historic Cut (Forbes)

Economists believe that because the UK is experiencing a significant downturn, with banks unwilling to lend and pass on interest rates cuts in full, the Bank will reduce rates close to zero to try and ease the impact.

Read moreBank of England cuts interest rates to lowest in more than 300 years

Japan slashes interest rates to 0.1%

The Bank of Japan today cut interest rates to 0.1% in another attempt by central banks around the world to drag the global economy out of recession.

The bank’s eight board members voted 7-1 to lower the basic lending rate from 0.3% to 0.1%, following a cut from 0.5% to 0.3% at the end of October.

The decision comes days after the US Federal Reserve voted for record low interest rates of between zero and 0.25%. This month the Bank of England slashed interest rates to 2%, their lowest level in 57 years, and is reportedly considering another cut when its board meets next month.

The central bank governor, Masaaki Shirakawa, described the decline in the global economy as “the most rapid in our lifetime” and said he could not rule out further cuts.

Read moreJapan slashes interest rates to 0.1%

Fed Cuts Rate to as Low as Zero, Shifts Policy Focus

The Fed is creating a crisis that will be even worse than the Great Depression.

Related Interview with Peter Schiff (12/13/08).

When the dollar is starting to fail commodities will skyrocket.

Watch Gold, Silver etc. closely now.

The dollar is soon as good as toilet paper.

Ron Paul, Peter Schiff and Jim Rogers warned a million times about this.

And remember that for all the people who lose their money and their homes there is always someone who profits from that, because these assets do not just disappear into the void. So who profits?!

I am not saying like many others that Ben Bernanke and Hank Paulson do not know what they are doing. They know exactly what they are doing and they do what they are told to do by their elite masters. (Look who founded the Federal Reserve and why. You may watch Zeitgeist, The Movie, Final Edition Part III of the movie which starts at 1:14:30.)

Bush, Obama, Bernanke and Paulson are all puppets. Nothing they do is really for the people, absolutely NOTHING.

Even if they create a stimulus package and give you a check they know that that money has to be paid back with interest and that it will be the taxpayer who has to pay for it all.

All they do now is destroying the dollar, the economy and the middle class. I have studied economics and I can assure you that it can be easily proven that stimulus packages only have a short term effect and that they have very harmful effects in the long run.

If you want to look good in the short term like Mr. Obama than a stimulus package is just fine. I even seriously doubt that it will have much effect because the US are broke. The stimulus package has to be financed and there is not much confidence left that the US can pay all that debt back. So nobody will soon be willing to buy US bonds anymore and creating more money out of thin air will create another Zimbabwe.

The Federal Reserve Refuses to Disclose Recipients of $2 Trillion: Dec. 12 (Bloomberg) — The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

These people are the worst criminals on the face of the earth. The elite has planned this crisis so many years ago that you would probably not believe me. Here always comes the question: “But why would they do this?” For MONEY, POWER and CONTROL.

Source: Bloomberg

Jeffrey Vazquez looks at a television after the Federal Open Market Committee’s (FOMC) rate decision on the floor of the New York Stock Exchange in New York, on Dec. 16, 2008. Photographer: Andrew Harrer/Bloomberg News

Dec. 16 (Bloomberg) — The Federal Reserve cut the main U.S. interest rate to as low as zero for the first time and shifted its focus to the amount and type of debt it buys, seeking to revive credit and end the longest slump in a quarter- century.

The Fed “will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Federal Open Market Committee said today in a statement in Washington. “Weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

Read moreFed Cuts Rate to as Low as Zero, Shifts Policy Focus

ECB Delivers Biggest Rate Cut Ever as Economy Slumps

Dec. 4 (Bloomberg) — The European Central Bank cut interest rates the most in its 10-year history after the region’s economy suffered the first recession since the introduction of the euro.

ECB policy makers meeting in Brussels lowered the benchmark lending rate to 2.5 percent from 3.25 percent. Only 17 of 56 economists in a Bloomberg News survey correctly forecast the move, with 35 predicting a cut of 50 basis points and 4 calling for a full percentage-point reduction.

The ECB’s decision came after the Bank of England today cut its key rate by one percentage point to 2 percent, the lowest level since 1951, and Sweden’s Riksbank pared rates the most in 16 years. The Federal Reserve’s benchmark rate now matches a five- decade low as central banks rush to respond to the global recession.

“This is better than 50 basis points, but they are still late coming to the party,” said Laurent Bilke, an economist at Nomura International in London who used to work as a forecaster at the ECB. “The economy is in deep recession now, so rates should come down as quickly as possible.”

Read moreECB Delivers Biggest Rate Cut Ever as Economy Slumps

China Property Slump Threatens Global Economy as Growth Slows

China Property Slump Threatens Global Economy as Growth Slows

Dec. 2 (Bloomberg) — House prices in Shanghai, Shenzhen and Guangzhou are plunging, and the global economy may grind almost to a halt next year because of it.

Construction of homes, offices and factories fell at least 16.6 percent in October after rising 32.5 percent a year earlier, according to Macquarie Securities Ltd. That’s squeezing an economy already slowed by recessions in the U.S., Japan and Europe that have cut demand for exports. Building is the biggest driver of China’s expansion, contributing a quarter of fixed- asset investment and employing 77 million people.

The central bank cut its key interest rate by the most in 11 years last week and the government said “forceful” measures were needed to arrest a faster-than-expected economic decline. Without more rate cuts and government spending, China is unlikely to contribute the 60 percent of global growth Merrill Lynch & Co. forecasts for next year, further slowing the world economy.

“China is now at the heart of the global slowdown,” said Jim Walker, chief economist at Asianomics Ltd., an economic advisory firm in Hong Kong. “It means that global growth is probably going to be dragged down close to zero next year.”

Read moreChina Property Slump Threatens Global Economy as Growth Slows

Australia cuts interest rates to seven year low; “The economy is on a knife-edge”

Australia’s interest rate was cut by a surprise 100 basis points today, taking the cash rate to the lowest it has been in seven years

The fourth cut in as many months, a full 25 basis points larger than economists predicted, is seen as further proof that Australia will struggle to avoid recession over the next 12 months.

“The economy is on a knife-edge,” said Macquarie economist Brian Redican.

The Reserve Bank cited the state of the global economy and a big downturn in domestic demand for the cut to 4.25%, with Glenn Stevens, the governor of the RBA, saying that ti was time to take monetary policy to an expansionist setting.

Analysts warned that the interest rate cut would not stop the economy from slowing further in line with the downturn in the US and China and predicted further rate cuts in 2009.

“This will help, but the headwinds coming off-shore are so large that the Australian economy will slow aggressivley next year,” Stephen Halmarck, a senior analyst for Citgroup told The Times. “Data out of the US and especially China has surprised everyone.

Read moreAustralia cuts interest rates to seven year low; “The economy is on a knife-edge”

China slashes interest rates as panic spreads

The People’s Bank of China cut interest rates by more than 1pc point as the economy crumbles and millions of jobs are predicted to go ahead of Christmas.

Factory workers surround a damaged police car during a protest outside Kai Da toy factory in Dongguan, China. Photo:REUTERS

The move came just one day after the World Bank predicted that China would grow by 7.5pc next year. The level of growth may appear robust by Western standards, but it would represent the slowest economic expansion in China for the last two decades.

It is also perilously close to the 7pc minimum level of growth that Chinese economists believe is necessary in order to create enough jobs for the 6m university graduates who will enter the jobs market next year.

Factory workers smash an office during a protest at Kai Da toy factory in Dongguan, China. Photo: REUTERS

It is the fourth interest rate cut from the Chinese central bank in the last ten weeks as the government desperately battles an evident economic collapse. “China is out to save itself here,” said Patrick Bennett, an analyst with Societe Generale in Hong Kong.

The PBOC reduced its main borrowing rate by 1.08pc points to 5.58pc, the biggest one-off cut since the Asian Financial Crisis in 1997.

In recent weeks, a series of riots across central and southern China have flowered as disgruntled employees aired their grievances at the downturn.

Read moreChina slashes interest rates as panic spreads

Fed sharply lowers forecasts, hints of rate cut

Fed sharply lowers economic forecasts for this year, 2009; signals another rate cut coming

WASHINGTON (AP) — The Federal Reserve on Wednesday sharply lowered its projections for economic activity this year and next, and signaled that additional interest rate reductions may be needed to help combat the worst financial crisis to jolt the country in more than a half-century.

With the economy forecast to lose traction, or even jolt into reverse, unemployment will move higher, the Fed predicted.

Facing the likelihood of “significant weakness” in the economy, some Fed officials suggested “additional policy easing could well be appropriate at future meetings,” according to documents from the Fed’s most recent closed-door deliberations on interest rate policy at the end of October.

Read moreFed sharply lowers forecasts, hints of rate cut

UK: Perilous state of economy revealed by MPC’s shock move

The perilous state of the UK economy was exposed as the Bank of England’s Monetary Policy Committee made an unprecedented 1.5 percentage point cut in interest rates.

Winston Churchill meets the Queen in 1955. Photo: PA

The shock vote brought interest rates down to 3pc for the first time since January 1955, when Winston Churchill was prime minister. Economists forecast that the cut could pave the way for further reductions – with some claiming that rates could hit a historic low of 1pc.

Thursday’s move was interpreted as a desperate attempt to protect the UK economy from a severe recession.

“There has been a very marked deterioration in the outlook for economic activity at home and abroad,” said the MPC in an explanatory statement, adding that the threat of inflation was now receding.

It warned that after the most serious crisis in the global banking sector for almost a century, households and businesses were likely to find it difficult to obtain credit “for some time.” The MPC counted falling share prices, a sharp reduction in UK output, and a squeeze on household budgets among a nasty cocktail of circumstances that have combined to hit both businesses and consumers hard.

The MPC’s decision came amid a raft of gloomy news and data emerged. Figures from Halifax, the UK’s biggest mortgage lender, showed that house prices have fallen by 15pc over the past 12 months.

It was the sharpest drop since the survey began in 1983 and brought the average house price down to £168,176 in October, compared with almost £200,000 in the same month last year.

Read moreUK: Perilous state of economy revealed by MPC’s shock move

Darling summons bank chiefs over rate cut failure

Alistair Darling summoned the chief executives of Britain’s biggest banks to Downing Street today to demand that they immediately pass on the Bank of England’s interest rate cut to their customers.

Treasury sources confirmed to The Times that the Chancellor told the heads of all Britain’s big high street lenders – including HSBC, Barclays, Lloyds TSB, HBOS Nationwide and Abbey – to implement rate cuts immediately.

Yesterday, the Bank of England slashed interest rates by 1.5 per cent to 3 per cent, the lowest level in 54 years, and today, the shock reduction helped to ease the strain in nervous money markets.

Libor, which is the rate at which banks lend to each other and is key for pricing mortgages, fell by more than one per cent from 5.561 per cent to 4.496 per cent.

However, the figure remains almost 1.5 per cent higher than the official interest rate.

The spread between the Bank of England’s borrowing cost and the rate that banks charge to borrow money over a three-month period – a key measure in the wholesale money market – is the widest since October 22. The day before, Mervyn King, the Governor of the Bank of England, publicly acknowledged for the first time that a recession in the UK is now likely.

Read moreDarling summons bank chiefs over rate cut failure