Europe, N America, China cut interest rates

The blog welcomes the co-ordinated action by central banks, including the US Federal Reserve, European Central Bank, and the Banks of England and China, in cutting interest rates. Anything that suggests policymakers are starting to get their act together is good news.

But as the blog has argued since February, cutting interest rates in today’s financial climate is like pushing on a string. Today’s cut similarly seems to be more gesture politics than a strategy to tackle the real causes of today’s problems – overleveraged banks, and collapsing housing markets.

Prospective lenders have clearly found current rates of interest unattractive, and so have exited the market. The blog therefore finds it hard to believe that cutting their potential reward will now encourage them to return

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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