Central banks told to take 'aggressive' action to spark recovery

Central banks around the world were last night urged to join forces in a coordinated strike to kick-start the global economy.

Leading economists called on the US Federal Reserve, the Bank of England, the European Central Bank and the Bank of Japan to take ‘aggressive’ action to stave off a double-dip recession.


The global economics team at investment bank Morgan Stanley said coordinated rate cuts and money printing could be agreed at the G7 meeting starting in Marseilles tonight.



Joint action: Ben Bernanke, Mervyn King and Jean-Claude Trichet must work together, say analysts

But analysts said central banks were unlikely to move so soon after the BoE and ECB made no changes at their monthly meetings yesterday.

BoE governor Mervyn King held interest rates at 0.5 per cent and resisted calls to print more cash having already pumped £200billion of emergency funds into the economy through quantitative easing.

The ECB also pegged rates in the eurozone at 1.5 per cent – but suggested that no more hikes were on the way having started raising borrowing costs five months ago. ECB president Jean-Claude Trichet said there were ‘intensified downside risks’ to the outlook for the single currency bloc, having last month warned of ‘upside risks’.

‘The change in tone firmly shelves rate hikes and even opens the door to rate cuts if the economic outlook deteriorates further,’ said ABN Amro economist Nick Kounis.

Analysts speculated it will only be a matter of time before the BoE prints more cash and the ECB cuts rates to bolster growth.

An alarming report by the Organisation for Economic Cooperation and Development underlined the scale of the slowdown in the global economy.

It said powerhouse economies such as Britain, America and the eurozone were lurching perilously close a double-dip recession. The highly-respected Paris-based group slashed its growth forecasts for the G7 and warned that the German economy will contract at the end of the year.

It forecast annualised UK growth of 0.4 per cent in the current third quarter and 0.3 per cent in the fourth quarter – the equivalent of just 0.1 per cent and even less on the quarterly measurement favoured in Britain.

Morgan Stanley economists, led by Joachim Fels, said that a package of tax cuts and spending increases ‘may be desirable but is unavailable’ to debtridden governments in the West.

‘The burden of propping up markets and the economy for the next few months thus falls on central banks,’ they said.

They added that Ben Bernanke, of the US Federal Reserve, Trichet, King and other leading central bankers could ‘all participate in a coordinated move with a mix of rate cuts and QE’.

Read more: http://www.thisismoney.co.uk/money/news/article-2035294/Central-banks-told-aggressive-action-spark-recovery.html#ixzz1XStDsAbs

hostgator coupon 2011