In the currency market, the dollar was little changed against the euro. Late Wednesday, the euro was trading at $1.3672 vs. $1.3653 on Tuesday. The big event du jour was that, “For the first time since September 2001, central banks around the world have delivered a coordinated interest rate cut,” wrote Kathy Lien, director of currency research at GFT.

The moves saw the Fed drop its key lending rate by half a percentage point, to 1.5%. The European Central Bank trimmed its key refi rate to 3.75% from 4.25%, while the Bank of England cut its key rate to 4.5% from 5%. The Bank of Japan stood pat, but issued a statement of approval.

The Bank of Canada, Swiss National Bank and Swedish Riksbank cut rates as well. The People’s Bank of China lowered rates by 0.27%, and allowed banks to set aside smaller reserves, but didn’t mention the joint effort.

Lien added that, “Coming two days before the G7 meeting and one day before the ECB interest rate decision, their move sends a strong message to market that the central banks are holding nothing back in their attempt to unlock the credit markets, stabilize the stock market and stimulate growth.”

Not good enough, according to Ian Shepherdson, of High Frequency Economics, who said that the “move is to be applauded, but there is more to come … The playbook to avoid depressions says rates need to be as close to zero as possible, banks have to be rescued, public spending has to rise and free trade must be maintained.”

We shall see.

Source: Central banks coordinate a rate cut -  First joint effort in 7 years may not be enough.