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Central Banks Cut Interest Rates

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BERLIN — Central banks around the world took major steps Thursday to stave off fears of global recession, with the European Central Bank slashing interest rates, China unexpectedly cutting bank lending rates and the Bank of England pumping billions of pounds into Britain’s stimulus program.

The measures reflect a growing sense of international urgency about faltering economies, and underline the continued power of central banks to take unilateral measures to fight the crisis.

In Europe, fears rose that the ECB was reaching the end of its tether to respond to the crisis through ordinary policy-making means.

The bank announced that it was reducing its benchmark interest rates to 0.75 percent, down from 1 percent. The move will make borrowing cheaper and could stimulate the sputtering countries that share the euro currency.

“The risks surrounding the economic outlook for the euro area continue to be on the downside,” ECB President Mario Draghi said in Frankfurt.

In Beijing, the People’s Bank of China cut interest rates for the second time in four weeks, lowering interest on one-year loans to 6 percent and saying that banks can discount rates by as much as 30 percent below that benchmark, an increase from a 20 percent allowable discount.

In Britain, the Bank of England announced that it was expanding its stimulus program by $78 billion.
— This article appeared on page B1 of the Albuquerque Journal

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