Press Release Summary: 'Cornerstone Worldwide' on the Reserve Bank of Australia's 100 basis point rate cut.
Press Release Body: Cornerstone Worldwide sources say that the Asian-based investment management brokerage expects other central banks to follow the example set by the RBA by significantly paring interest rates in the coming weeks.
The Reserve Bank of Australia cut its benchmark interest rate by 100 basis points in response to deepening turmoil on the world's financial markets. Cornerstone Worldwide believe that that this is a precursor to more coordinated action by other major central banks over and above the record levels of liquidity being injected into the interbank money markets.
Cornerstone Worldwide pointed to a US Federal Reserve decision to double the funds it makes available to financial institutions needing to access the term auction facility from $450bn to $900bn as an indication of how serious the crisis has become.
As little as a month ago, commentators were suggesting that the next move in US interest rates was likely to be up as the Fed sought to bolster its inflation-fighting credentials but the exacerbation of global market turmoil following the bankruptcy of Lehman Brothers and the bailing out of insurer, AIG has seen such speculation give way to calls for rate cuts.
Cornerstone Worldwide analysts are thought to be unconvinced of the benefit of a rate cut beyond providing a short-term fillip for equity markets.
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2022
