Five of the world’s leading central banks including the Bank of England plan to inject £54bn of cash loans into the money markets. They hope this would ease the interbank rates (the rate used by banks to lend each other money) which has remained stubbornly high despite the quarter rate cut last week. Although some analysts believe this will result in an immediate reduction in the interbank rates (and filtering through to mortgages/loans) others however, warn that it would take time for lender to trust each other again. Probably not while there are still huge bank losses still to be realised from the subprime crisis for some months to come. So will this gesture make a difference or has it come too late? We’ll have to wait and see.
Tags: Bank of England, central banks, Credit crunch, interbank rates