3 European central banks slash rates

BoE and Swedish Riksbank cut bank rates to 2%, while ECB chops key lending rate to 2.50%.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Catherine Clifford, CNNMoney.com staff writer

The holiday shopping season is off to a slow start. What is your spending strategy?
  • Stick to a list
  • Wait for better deals
  • Buy fewer gifts
  • I don't have a strategy

NEW YORK (CNNMoney.com) -- Three European central banks slashed key interest rates Thursday in attempts to stem the recession.

The Bank of England cut its rate to 2% from 3%, which followed a reduction of 1.5 percentage points to 3% on Nov. 6. The Bank of England has never set its rate below 2%. It was last at 2% in 1951.

The European Central Bank, which governs monetary policy in 15 countries, cut its key lending rate by three-quarters of a point to 2.50%.

Both the Bank of England and the ECB were widely expected to lower interest rates.

In a written statement from the Bank of England, the central bank leaders said "downturn has gathered pace." The statement also said that the credit markets remain very tight and that it could be awhile before lending returns to normal.

"Despite the actions taken to raise bank capital, ease funding and improve liquidity, conditions in money and credit markets remain extremely difficult," said the Bank of England's monetary policy statement.

In a Web broadcast, European Central Bank President Jean-Claude Trichet said that inflation rates have moderated but that economic activity has continued to slow.

"The decline in inflation rates is due mainly to the fall in commodity prices and a significant slowdown in economic activity," said Trichet. He also said that global demand was expected to continue to weaken.

Trichet also said that the financial markets have been plagued by high levels of anxiety. "The level of uncertainty remains exceptionally high," he said. "Since September, there has been an intensification and broadening of the financial market turmoil," he added. "Tensions have increasingly spilled over from the financial sector into the real economy and the world economy as a whole is feeling their adverse effects."

The Swedish Riksbank also cut its key interest rate - or repo rate - by 1.75% to 2%.

In a statement from the Swedish central bank, the institution reported "there has been an unexpectedly rapid and clear deterioration in economic activity since October." The statement further indicated that it expects the economic weakness to continue.

The U.S. Federal Reserve has lowered its key lending rate nine times since September 2007 in an attempt to bolster the U.S. economy. At the end of October the Fed cut the key lending rate in the U.S. to 1%. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.