The central banks lowered interest rates in an unprecedented, emergency coordinated bid to "ease the economic effects of the financial crisis."
The Fed cut its benchmark rate by a half point to 1.5%, as the ECB and central banks of the U.K., Canada, Sweden and Switzerland followed suit.
Here is the Fed statement:
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.
Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation.
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.
Despite the half point interest rate cut, world markets continued to decline overnight and the US market looks to open down also. Investors seem desperate to get to cash and Gold has now jumped above 900 per ounce this morning.
Confidence seems to be lost as fear has overcome all other emotions. Fear is now leading the market as trillions of dollars of leveraged positions unwind. Fear is spreading so quickly that events are coming in faster then the media can make sense of them. The question is who can lead the global markets away from fear that is without question driving the market.