What a difference a day makes. Yesterday this author called for all major central banks to cut policy rates to address the severe liquidity and credit crunch that is infecting the G7 and Eurozone financial markets and prevent a global hard landing. 24 hours later we have now:
- the Fed clearly on the way to cut rates next week for the third time in a row, the only issue being now whether it is going to be a 25bps or 50bps cut.
- The Bank of Canada cutting its policy rate by 25bps yesterday given the financial markets turmoil and the excessive strength of the loonie.
- The Bank of England deciding by tomorrow whether to cut its policy rate with the authoritative Financial Times editorial column today recommending a rate cut in the UK and being sympathetic to rate cuts by other central banks as long as growth is under threat. Hopefully Mervyn King and his fellow policy makers at the BoE will follow the advice of the FT and others who are now calling for a rate cut.
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