Central banks join forces to tackle problems
The US Federal Reserve, the European Central Bank, the Bank of England and the central banks of Canada, Japan and Switzerland have pledged to support the global financial system by making it cheaper for banks to buy US dollars and other major currencies hopefully making finance easier to access.
This will begin from 5 December and was welcomed by the markets throughout Europe and the US.
Commenting on the move, Andrew Tyrie MP, chairman of the Treasury Select Committee, said: “The globally coordinated action taken today is very welcome, providing much needed liquidity, and some reassurance, to financial markets.
“Both the Chancellor and the Governor [of the Bank of England] have made clear that the eurozone crisis is prejudicing UK growth but there is only so much that can be done domestically to assuage eurozone and global liquidity problems.”
Rathbones’ chief investment officer, Julian Chillingworth, said: “The market’s positive reaction [to the move] is symptomatic of the now entrenched risk-on, risk-off trade.
“It’s a welcome palliative ahead of next week’s EU Leaders Summit, and it would not surprise me if we see another rabbit pulled out of the hat to placate markets during that time. But it does little to address the underlying structural issues.”