<\/p>\n
Six central banks have cut their interest rates by half a percentage point<\/a>.\u00a0 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%.\u00a0 The UK trimmed the interest rate to 4.5% from 5%.\u00a0 The central banks of Canada and Sweden and Switzerland all took similar action in the coordinated move.\u00a0 China also cut its rate, but by 0.27 percentage points.<\/p>\n The unprecedented step is aimed at steadying a faltering global economy and slumping stock markets.\u00a0 But will it work?\u00a0 Does the interest rate have anything to do with the real economy?\u00a0 Does it bolster trust in the financial industry?\u00a0 No, not really.\u00a0 There might be brief relief and a short rise in confidence, but the underlying fundamental picture is not changing.<\/p>\n It is another knee jerk reaction.\u00a0 It is good to send a signal that regulators are “doing something” but it does not mean it is has been thought out or is the right thing to do.\u00a0 It is unlikely to help the people least able to weather economic hardship.<\/p>\n What regulators have not admitted is that there is no quick fix.<\/p>\n A resuscitation of financial markets must be underpinned by integrity.\u00a0 At first this means honest communication.\u00a0 It might also mean that privately owned banks are required to lend again (eg the UK government acquisition of preference shares might help leverage this liquidity), because without credit well over half of western economies evaporate.<\/p>\n Financial market players also must change their thinking to operate happily in markets of deflation and negative growth.\u00a0 This means changing metrics and objectives.\u00a0 These adjustments take time, but should be considered by regulators sooner rather than later.\u00a0 And have repercussions for all other policy areas.<\/p>\n The saga continues …<\/p>\n","protected":false},"excerpt":{"rendered":" Six central banks have cut their interest rates by half a percentage point.\u00a0 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%.\u00a0 The UK trimmed the interest rate to 4.5% from 5%.\u00a0 The central banks of Canada and Sweden …
Continue reading Interest rates cut in desperation …<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[11],"tags":[],"class_list":["post-524","post","type-post","status-publish","format-standard","hentry","category-interest-rates-and-currencies"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p4hwcd-8s","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/posts\/524","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/comments?post=524"}],"version-history":[{"count":0,"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/posts\/524\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/media?parent=524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/categories?post=524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.astraea.net\/blog\/wp-json\/wp\/v2\/tags?post=524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}