World economy

Bank of England, ECB cut interest rates

Article published on the 2008-11-06 Latest update 2008-11-06 15:55 TU

Jean-Claude Trichet, President of the European Central Bank
(Photo: Reuters)

The European Central Bank (ECB) cut its key lending rate Thursday, following the Bank of England's record cut of 1.5 per cent, in an atttempt to fend off the worst effects of a predicted recession.

The ECB governing council lowered its benchmark rate by 0.5 percentage points to 3.25 per cent, following a half percentage point cut in October.

The bank has reversed its earlier opposition to reductions, following the world financial crisis and the European Commission's prediction of Europe-wide recession.

Earlier Thursday the Bank of England took more drastic action, cutting its borrowing costs by 1.5 per cent, the largest reduction since it beame independent in 1997.

The Swiss National Bank also announced an unscheduled cut, cutting its three-month Libor rate by half a percentage point.

The Economy Ministry of Germany, Europe's biggest economy, has announced that industrial orders were down eight per cent between August and September, thanks largely to shrinking exports.

And Hungarian Prime Minister Ferenc Gyurcsany has revealed that 3,269 people have lost their jobs as a result of the financial crisis. Gyurcsany cited the figure in a letter to the International Monetary Fund, which gave his country a 20-billion-euro lifeline last month.

A number of companies, including the US's General Electric, have started cutting jobs in Hungary, whose eonomy is oriented towards exports.