Finally a coordinated rate cut

Maybe the Federal Reserve had been holding off on a rate cut in order to arrange for a globally-coordinated cut, which did in fact occur this morning, with the Fed cutting its target rate by a half-point to 1.50% and the discount window rate by a half-point to 2.25% and a number of other central banks taking action as well. From the Fed:

Joint Statement by Central Banks

Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets.

Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability. 

Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.

Federal Reserve Actions
The Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures.

...

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-3/4 percent.  In taking this action, the Board approved the request submitted by the Board of Directors of the Federal Reserve Bank of Boston.

Information on Actions Taken by Other Central Banks
Information on the actions that will be taken by other central banks is available at the following websites:

Bank of Canada   
Bank of England 
European Central Bank
Sveriges Riksbank (Bank of Sweden)
Swiss National Bank

The big benefit of coordinated action is that it does not incite a wholesale shift from one currency to another as speculators attempt to arbitrage interest rate differentials.

-- Jack Krupansky