China Cuts Rates, Fed and Others Set to Follow - Ammunition
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AMMUNITION
The Bank of Japan will consider cutting rates at a policy meeting on
Friday but will watch market conditions before deciding, a source with
knowledge of the matter told Reuters.
Bets on a quarter-point cut to 0.25 percent reversed a recent surge
in the yen, sparking the dollar's biggest one-day gain versus the yen
on Tuesday since 1974. The yen regained a small portion of those losses
on Wednesday.
The European Central Bank and the Bank of England are expected to
ease policy at their regular meetings next week. The ECB is expected to
cut a half point off rates to 3.25 percent, according to a Reuters poll.
While that would bring the ECB's benchmark rate to its lowest in two
years, policy-makers have the scope to deal with a worsening economy
that should stabilize by late next year, ECB Governing Council member
George Provopoulos was quoted on Wednesday as saying.
"I don't think that the ECB has exhausted its ammunition," he said in an interview with Dow Jones newswire.
BAIL OUTS AND LOSSES
Governments have pledged about $4 trillion to support banks and
restart money markets to try to stem the crisis set off by the bursting
of a bubble in the U.S. housing market.
As credit lines have dried up, a growing number of governments have had to look for help from global lenders.
The IMF, European Union and World Bank agreed to a $25.1 billion economic rescue package for Hungary.
Ukraine, Belarus, Pakistan and Iceland are also among the countries
in various stages of seeking, securing or considering IMF help.
South Korea denied speculation it was seeking IMF support but said
it would ease won liquidity requirements on banks to help bring down
their funding costs.
IMF officials have said that the fund may need additional resources
in a prolonged crisis and European Commission President Jose Manuel
Barroso said on Wednesday China and the Gulf countries could do more to
help the IMF support countries hit by the financial crisis.
There were more signs that the acute financing difficulties were
easing. The closely watched rates that banks charge each other to
borrow dollars fell as central banks continued to inject extra
liquidity into the system.
However, sustained recovery is another issue, as the turmoil
continues to spread throughout the financial and investment business.
Asset management groups Schroders Plc, Legg Mason Inc and Invesco
Ltd reported funds under management fell due to the financial crisis
and earnings declined.
(Reporting by Reuters bureaus worldwide; Editing by Tom Hals)
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