European rate cuts are good news
The best part about this piece of news is this absolutely stunning picture of London's financial district. That alone makes this blog post worth a rec ;).
The big economic news today is that in an unprecedented move, the Bank of England cut in interest rates by a point and a half this morning. No wonder the Pound has been getting pounded lately. And we thought that the 75 basis point cuts by the Fed were aggressive. England's benchmark interest rate is now 3.0%, much higher than the 1.0% that we have here in the U.S.
To give some perspective, this is the first time that the B of E has cut rates by more than 50 basis points since becoming independent in 1997 and is its largest rate cut since March of 1981. England's benchmark rate has not been this low since 1955.
In similar news, the European Central Bank announced this morning that it is cutting rates by a substantial, but less aggressive 50 basis points.
From the perspective of someone in the U.S. these moves have to be considered good news. Sure it means that the European economies are in bad shape, but even if the rate cuts don't help as much as they have in past recessions they will at least help some. Theoretically the cheap money will stimulate demand and encourage lending.
Bank of England slashes interest rate by a point and a half
ECB Cuts Interest Rate by Half Point to Counter Economic Slump