HONG KONG - THE Hong Kong Monetary Authority announced it will cut its key interest rate by 100 basis points from Thursday, looking to address the credit crunch that has wreaked havoc on markets worldwide.

It said the base rate would now be calculated using the US Federal Reserve's benchmark plus 50 basis points, meaning the Hong Kong rate would effectively be reduced to 2.5 per cent from 3.5 per cent.

Thai central bank maintains interest rate at 3.75% BANGKOK - THE Bank of Thailand on Wednesday left interest rates unchanged at 3.75 per cent, as inflation in the kingdom dropped on the back of a global fall in oil prices, a bank official said. 'The risk of inflationary pressure has sharply dropped when compared to our previous meeting because oil prices dropped,' said bank deputy governor Duangmanee Vongpradhip. ... more

The move comes with central banks around the world looking to increase liquidity to try to put the brakes on the worst financial crisis since the Great Depression, which has sent stock markets plunging.

It followed a strong hint from Fed chief Ben Bernanke that a US rate could be coming soon.

Hong Kong's currency is pegged to the US dollar, and the city usually follows changes to the US rate. But HKMA chief executive Joseph Yam said the decision had taken account of the current conditions on global markets.

He said he hoped the move would ease the pressure on banks to increase lending rates in the face of tight credit markets.

Central banks have been trying to ease the credit crunch, which has pounded stock markets around the world.

Hong Kong's benchmark index opened down 5.1 per cent on Wednesday, after the Dow dropped 5.1 per cent overnight in the United States and closed at a five-year low.

China rate cut expected
China is expected to cut interest rates soon to help prop up its economy amid increasing fears over a global economic slowdown, state media reported on Wednesday.

The financial crisis that started on Wall Street has invaded the real economy, making it increasingly likely that China will follow other central banks around the world and cut rates, the China Securities Journal said.

Lower lending rates would encourage consumers and Chinese companies to invest and spend as the growth of corporate earnings slows and consumer confidence weakens, the newspaper said in a front page editorial.

The newspaper, an official mouthpiece for China's securities regulator, said the central bank allowed the yield of one-year bills, widely seen as a barometer of benchmark interest rates, to fall nearly 10 basis points on Tuesday, fuelling expectations of an imminent rate cut.

The newspaper said a cut could come as China announces economic figures for the third quarter including the consumer price index (CPI), which are due to be released the week of October 20.

'An interest rate cut may come at any minute after September economic data including CPI are released,' the newspaper said.

China's economic growth slowed to 10.1 per cent in the second quarter of 2008 against a backdrop of cooling global expansion.

The economy grew by 11.9 per cent in the whole of 2007.

In September, China reduced the benchmark one year lending rate by 27 basis points to 7.20 per cent, the first cut in lending rates since 2002 in a strong indication that it is becoming concerned about the need to spur growth. -- AFP