Europe slashes interest rates

To take care that the economy stay stable the interest rates in Europe were reduced.
The Bank of England decided to reduce their interest rate to 3 per cent, that’s a reduce of 1.5 percent.
This interest rate is the lowest in 54 years and the cut was three times bigger since 1997.

The European Central Bank set their interest rate on 3.25 percent. The president of the ECB said that he wouldn’t exclude a further cut in December.

The Czech and Swiss bank also proclaimed to reduce their interest rate.

The rate cuts came after the International Monetary Fund published an update about the economy and the need to take some action because the economy need it. The world his economy would shrink by 0.3 percent next year the first negative figure since the second world war. This isn’t satisfying news because last month they calculated that there would be a growth with 0.5 percent. The IMF recommended the United States, Europe and China should raise public spending and cut taxes.

The markets weren’t satisfied because they are concerned about the situation of the global economy.
The FTSE 100 lost 5.7 percent.
German and French markets fell down with 6 percent and the S&P 500 index had fallen 4.26 percent.

The reason why the Bank of England reduced their interest rate is because there is a lot of pressure on the economy these days.

The analysts think the interest rate will drop down under two percent in Europe after they said that it could be possible the ECB would make another rate cut.

The president of the ECB said that he hopes that the banks will bring down their market interest rate, that’s the only solution to restore the confidence on the markets and in the economy. This is the opposite of the thoughts of the Bank of England who don’t expect a cut in the market interest rate.

I think we really need a economy that is stabile now. It is a good decision on the long term. We made a deep crisis and everybody was in panic, also the leaders of big countries and nobody knew a real solution so we need some rest and confidence. An stabile economy is part of this so I think it’s a good decision. On the markets it isn’t really good after this decision but this will come okay. A stabile economy is a part of rest and confidence of the consumer.
Europe isn’t the first one who made this decision and in the future there will be other countries who have to follow the example of the ECB.
Today the markets were negative but I think this will change after some time because it will bring rest and confidence.

Source: http://www.ft.com/cms/s/0/bfcae896-abf2-11dd-aa46-000077b07658.html?nclick_check=1