Rate hopes rise as Clinton calls for G7 crisis action

HOPES OF interest rate cuts in the world's leading economies were raised last night when President Clinton joined the G7 group of industrial nations in calling for a co-ordinated response to the global financial crisis.

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.

Outlook, page 19

PROMOTED VIDEO
News
video
Life and Style
tech
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
film
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Extras
indybest
News
Albus Dumbledore, the headmaster of Hogwarts School of Witchcraft and Wizardry has been the teaching profession's favourite teacher
education
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform