Speaking at the Council on Foreign Relations in New York, Mr Clinton said the priority was now to boost world growth rather than curb inflation, a statement interpreted as a signal that joint action to cut rates was now possible.
His call for action, which coincided with a similar communique from G7 finance ministers and central bank governors, helped propel stock markets forward. The FTSE 100 closed up 150 points at 5268.6 in London, and the Dow was up 200 points, breaking the 8,000 barrier at lunchtime in New York. By the close the Dow's gain had been trimmed to 149.85 points, or 1.9 per cent at 7945.35.
The President called for senior finance officials to meet within 30 days to discuss the global economy. Mr Clinton said the G7 group of industrialised nations must be ready to act swiftly, and with force, if currency crisis strikes in Latin America.
He said: "For most of the last 30 years, the United States and the rest of the world has been preoccupied by inflation.
"Clearly the balance of risks has now shifted - with a full quarter of the world's population living in countries with declining economic growth. Therefore, I believe the industrial world's chief priority today plainly is to spur growth."
In a separate statement last night, G7 finance ministers and central bank governors said they would support "a co-operative international approach to support those countries that had been adversely affected by recent developments in global markets and which are implementing strong economic programmes."
They expressed concern about the withdrawal of capital from the emerging markets and reaffirmed their commitment to the International Monetary Fund.
In echoes of Mr Clinton's speech, the G7 finance ministers and cental bank governors also said the balance of risks in the world economy had shifted.
They added they would consider measures to alleviate the effects of the crisis on the poorest segments of society, but stressed that "unilateral action" on debt by countries hit by the crisis could hurt the world economy.
Gordon Brown, Chancellor of the Exchequer, who flies to Japan today to meet finance officials, said there was a concern about what was happening and a preparedness to take action where it was necessary.
However, he warned against taking "the precipitate action that was taken at other times which led to serious results in the late 1980s."
The Chancellor was referring to the co-ordinated interest cut that took place following the market crash of 1987, and which was subsequently blamed for stoking up inflationary pressures in the global economy.
In a separate statement, the International Monetary Fund said it was ready to help Latin America if necessary, and in his speech Mr Clinton called on Congress to approve the $18bn he has requested to replenish the IMF's depleted resources.
Meanwhile, better-than-expected manufacturing price data in the UK could help pave the way for early rate cuts, economists said.
The Office for National Statistics (ONS) said producer input prices fell by 0.9 per cent in August, while producer output prices were down 0.2 per cent on the month.
The markets had been expecting a 0.7 per cent drop in input prices and static output prices.
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