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

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Life and Style
tech
News
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
film
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
News
Ruby Wax has previously written about her mental health problems in her book Sane New World
people
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

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas