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Fed set to cut rates, others poised to follow
(Agencies)
Updated: 2008-10-29 19:32 The expected rate cuts buoyed Asian and European stock markets. Japan's Nikkei ended up 7.7 percent and European shares climbed 4.5 percent. US shares were expected to fall, following the second-biggest ever rise a day earlier. Analysts said any market recovery would be short-lived. "Enjoy the party while you can," said David Buik, market commentator at Cantor Index in London. BAIL OUTS Governments have pledged about US$4 trillion to support banks and restart money markets to try to stem the crisis set off by the bursting of a US housing market bubble. But 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 US$25.1 billion economic rescue package for Hungary. "The Hungarian authorities have developed a comprehensive policy package that will bolster the economy's near-term stability and improve its long-term growth potential," IMF Managing Director Dominique Strauss-Kahn said in a statement. Ukraine, which has been offered US$16.5 billion by the IMF, was told to pass legislation through its fragmented parliament or risk no loan, higher inflation and a default on its debts. "I spoke yesterday with the IMF. Its examination of the question of extending credits to Ukraine depends on the actions of Ukraine's parliament," parliament's chairman, Arseniy Yatsenyuk, told the chamber. Central bank chairman Volodymyr Stelmakh said failure to secure the loan would lead to "double-digit inflation ... as well as moral discredit and declaring default." In neighboring Belarus, run largely along command-economy lines, the deputy central bank head said the country was optimistic about agreeing a US$2 billion IMF loan, and was ready to liberalize its economic policies. "Our macro goal is for this credit not to be used at all. In the current situation we don't need this money ... But we don't know how deep is the global crisis," Vasily Matyushevsky said. Pakistan's central bank governor said it was in no danger of defaulting on its debt and was still considering whether to expand on technical help with the Fund. South Korea denied it was seeking IMF support. The Fund has agreed a US$2.1 billion loan to Iceland, where the financial system has all but collapsed. Reykjavik raised interest rates by 6 percentage points to 18 percent to try to defend its currency, part of a deal struck with the IMF. The lender's first deputy managing director John Lipsky said a prolonged crisis could mean it would need more resources. "It is worth thinking that if the problems continue to grow that we might think about whether we would need additional resources and we will be discussing with our members that possibility," Lipsky told CNBC. The European Union's executive said the bloc's crisis funding facility of 12 billion euros (US$15.3 billion) might not be enough and should be increased. |