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Central banks cut interest rates Central banks cut interest rates
(10 minutes later)
Seven central banks - including the Bank of England - have cut their interest rates by 50 basis points. Six central banks - including the Bank of England - have cut their interest rates by 50 basis points.
The UK rate move - which had not been expected until Thursday - puts interest rates at 4.5% from 5%.The UK rate move - which had not been expected until Thursday - puts interest rates at 4.5% from 5%.
The US Federal Reserve has cut rates from 2% to 1.5% and the European Central Bank trimmed its rate from 4.25% to 3.75%. The US Federal Reserve has cut rates from 2% to 1.5% and the European Central Bank (ECB) trimmed its rate from 4.25% to 3.75%.
The central banks of Canada, China, Sweden and Switzerland all took similar action in the co-ordinated move.
The unprecedented step is aimed at steadying a faltering global economy and slumping stock markets.The unprecedented step is aimed at steadying a faltering global economy and slumping stock markets.
The central banks of Canada and Sweden and Switzerland all took similar action in the co-ordinated move.
China also cut its rate by 27 basis points.
European financial markets reacted well, pulling back some of the losses seen earlier on Wednesday.
The last time the Bank of England cut rates in a special meeting was on 18 September 2001 - when rates came down from 5% to 4.75%.
'Bold and decisive'
The announcement came hours after the UK government unveiled plans for a £50bn rescue plan for UK banks.
Responding to the rate cut, UK manufacturers' group the EEF welcomed the " bold and decisive move" it hoped would "arrest the current crisis and collapse in confidence".
"Coupled with the plan to shore up the financial system today's co-ordinated moves should help arrest the potential slide into depression," said the EEF's chief economist Steve Radley.
The Fed said that it had acted "in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures".The Fed said that it had acted "in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures".
And the ECB said it had felt able to act because "inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices".
Although it did not cut its own rate - which is just 0.5% - the Bank of Japan, expressed its "strong support" of the policy.