Three premier central banks — China, Europe and Britain — loosened monetary policy in the space of less than an hour yesterday, signaling a growing level of alarm about the world economy.
But suggestions of coordinated action were played down, despite the surprise move from Beijing which lowered its lending rate by 31 basis points to 6 percent following an interest rate cut just a month ago which also came out of the blue.
The European Central Bank cut rates to a record low 0.75 percent following a dire run of economic data. But it steered clear of bolder moves such as reviving its government bond-buying program or flooding banks with more long-term liquidity.
The Bank of England, whose rates are already at a record low 0.5 percent, said it would restart its printing presses and buy 50 billion pounds ($ 78 billion) of assets with newly created money to help the economy out of recession, said a Reuters report.
Analysts felt that the banks’ swift action reflected policymakers’ concerns about the global economy. They also reasoned that with a raft of Chinese data due next week, the Chinese central bank was trying to foster suggestions of a coordinated action.
In Frankfurt, ECB President Mario Draught denied any globally coordinated central bank action of the sort seen after the collapse of Lehman Brothers in 2008.
"On coordination, no, there wasn't any ... that went beyond the normal exchange of views on the state of the business cycle, on the state of the economy, and on the state of global demand," he told a news conference.
Asked if conditions were now as bad as they were in late 2008 when the world's financial system was teetering, Draghi replied: "Definitely not."
In recent weeks, economic evidence from Asia, Europe and the United States has pointed to a world economy running out of steam.
Elsewhere, Denmark's central bank cut interest rates by 25 basis points, shadowing the ECB's action, in a historic move that put one of its secondary rates into negative territory for the first time. Kenya ended its nine-months-long hawkish stance with a bigger-than-expected 150 basis points rate cut.
Central banks leap into action in sign of alarm
