The unprecedented has become almost routine. One day after saying it would set up a facility to buy commercial paper directly from corporate issuers, the Federal Reserve early on October 8 issued a joint statement with five other central banks around the word that it would reduce interest rates. The banks include the European Central Bank, the Bank of England, and the Canadian, Swedish, and Swiss national banks.
Later in the day, the Chinese national bank also cut its benchmark lending and deposit rates by 27 basis points, while the Bank of Japan expressed its support of the actions.
The statement from the Fed noted that “inflationary pressures have started to moderate in a number of countries,” and that “inflation expectations are diminishing.” The Federal Open Market Committee thus decided–three weeks ahead of its next scheduled meeting–to lower its target for the federal funds rate by 50 basis points, to 1.5%. The other central banks also cut their rates by 50 bps.