WORLD> Europe
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WORLD> Europe
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Europeans cut interest rates sharply to fight crisis
(Agencies)
Updated: 2008-12-05 09:14 FORECLOSING AND RETAILING In other measures to deal with the economic crisis, US Federal Reserve Chairman Ben Bernanke urged more aggressive action to halt home foreclosures. Many economists believe the US economy cannot recover until the free-falling housing market stabilizes. The International Monetary Fund's chief economist said the global economy has stepped back from the brink of financial catastrophe, but it is not entirely out of danger. "The message from the financial markets at this point is that progress has been made, but it is much too early to declare victory," Olivier Blanchard wrote in the December issue of the magazine Finance & Development. The chief executives of the major US auto companies went cap in hand to Washington to plead for $34 billion in aid from Congress so they can stay in business. It was their second appearance there in as many weeks. The president of the United Auto Workers warned a Senate panel that General Motors and Chrysler were on the brink of failure. "We could lose General Motors by the end of this month," Ron Gettelfinger said. US retailers posted sharply lower November sales. Discounter Wal-Mart Stores Inc bucked the trend with a bigger-than-expected rise, but excluding its results, same-store sales fell 7.8 percent, worse than the 6.9 percent decline forecast by analysts, according to Thomson Reuters. That was the worst monthly performance since it began tracking sales data in 2000. Still, in a sign for the better, nearly half of the 35 retailers reviewed by Thomson Reuters beat bleak sales estimates. In a separate measure of the now struggling retail sector, the International Council of Shopping Centers said US monthly chain same-store sales fell a record 2.7 percent year-on-year in November. It forecast November-December holiday chain same-store sales would be flat to down 1.0 percent. STIMULATING France announced a 26-billion-euro ($32.9 billion) stimulus plan targeting infrastructure and investment projects for its faltering economy as data showed the unemployment rate rose in the third quarter to 7.7 percent. With the United States, Europe and Japan now in recession, data showed a mounting pattern of job losses and corporate woes across the globe. US factory orders fell a whopping 5.1 percent in October, much worse than expected. The global interest-rate cuts are aimed at making credit cheaper and so boost spending, but banks will need to overcome their reluctance to lend for the measures to take hold. Sweden's central bank, the Riksbank, said it expected rates to remain at the new 2.0 percent level over the coming year. There was an "unexpectedly rapid and clear deterioration in economic activity since October," it said. The Bank of England, also taking rates down to 2.0 percent, made clear the downturn had picked up pace and conditions in credit markets remained difficult. Indonesia also made a surprise cut in its key interest rate, by 0.25 percentage point to 9.25 percent -- the first since December 2007 as the government sought to protect the economy. |
