Central bank action to avert a liquidity crisis cheered markets on Wednesday but highlighted the depth of international concern about possible economic turmoil in Europe.
In a co-ordinated move with other central banks, the US Federal Reserve slashed the penalty rate that it charges them on dollar liquidity from 100 to 50 basis points. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Earlier, China made a decisive shift towards easier monetary policy and Brazil last night cut its benchmark Selic interest rate by 50 basis points for the third time since August, citing adverse global economic conditions.
US and European equities rose sharply, with the FTSE 100 closing up 3.1 per cent and the S&P 500 up 4.3 per cent in New York. The euro jumped 1 percentage point against the dollar. But analysts warned the move did not address the fundamental issues behind the eurozone’s sovereign debt crisis.