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.. the U.S. subprime mess has thus claimed another victim, contrary to the happy talk from U.S. officials earlier in the year that it would remain "contained" ...
The bank explicitly cited the contagion from subprime in its statement announcing the quarter-point cut..
The bank acted to "neutralize" next week's expected rate cut by the U.S. Federal Reserve..
The European Central Bank and the Bank of England could come to the same decision next week and surprise the market with cuts of their ow
With $361 billion in subprime loans made to borrowers with weak credit resetting at higher interest rates next year, foreclosures will peak in the third quarter of next year and won't drop back to more normal levels until 2011, said a Banc of America Securities report out last month.
RBA 'running scared' of global credit crisis
Until now, Australia's central bank has only issued a statement after its monthly board meeting if rates change, and it has never released the minutes of its board deliberations.
Today all that changed.
The first revelations from those minutes reveal that it is global financial turbulence which has saved Australians from another lift in official interest rates this month.
The continuing global uncertainty also puts further rates rises in Australia in doubt.
The contrast between the minutes of the November Reserve Bank board meeting and today's statement is marked.
Major central banks are now on the way to cut policy rates
...while many intelligent and articulate voices (Munchau, Buiter and Munchau again today) are calling for central banks to resist cutting rates or even raise them to address the risks of rising headline inflation the policy wind is clearly blowing now in the direction of a generalized monetary policy easing by most advanced economies central banks.
The plan will freeze certain subprime mortgages for 5 years, a compromise hammered out with mortgage lenders and banking regulators.