She provided first aid to the injured until the arrival of the ambulance
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In a 45-minute span, the European Central Bank and People’s Bank of China (PBOC) cut their benchmark borrowing costs, while the Bank of England raised the size of its asset-purchase programme. They acted two weeks after the Federal Reserve expanded a programme lengthening the maturity of bonds it holds and Chairman Ben S. Bernanke indicated more measures will be taken if needed.
Policy makers are reacting as Europe’s debt crisis persists, US hiring slows and emerging markets soften. The jury is out on whether the additional monetary medicine will work five years after central banks began to dole it out to battle the financial crisis or if more will be needed.
The Bank of England began Thursday’s stimulus push, announcing it would restart buying bonds two months after stopping as it tries to pull its economy from recession. Governor Mervyn King and colleagues raised their asset-purchase target by £50 billion ($78 billion) to £375 billion, meeting the forecast of most economists. They said the economy will likely remain sluggish after contracting in the past two quarters.
Within a minute of that decision, the People’s Bank of China cut its key interest rate for the second time in a month and allowed banks to offer bigger discounts on their own lending costs. The one-year lending rate will fall by 31 basis points and the one-year deposit rate will drop by 25 basis points effective tomorrow. Banks can offer loans of as much as 30 per cent less than benchmark rates.
The world’s largest emerging market is acting more aggressively to promote growth that may have decelerated for a sixth quarter. Officials moved after two manufacturing indexes fell in June and ahead of a report on second-quarter gross domestic product, due on July 13. At 1:45pm in Frankfurt, the ECB also cut its main rate by 25 basis points to a record low of 0.75 per cent and said it will no longer pay anything on overnight deposits as it tries to prevent the sovereign debt turmoil from driving the 17-nation euro economy into recession. Both actions were anticipated by economists.
While President Mario Draghi has questioned the economic impact of lower interest rates, they could make it easier for banks to borrow and lend as well as build on the confidence boost euro-area governments delivered last week when they moved toward a deeper economic union. He said on Thursday that the central bank is not “running low on policy options,” without elaborating on what else it may do.
Draghi told reporters that risks to the outlook remain “on the downside” and that heightened uncertainty is hurting confidence. Asked if there was any coordination with other central banks before today’s announcements, he said there “wasn’t any communication beyond the normal exchange of views.”
The steps by the UK and euro area will push JPMorgan Chase & Co’s average interest rate for developed economies to a crisis-era low of about 0.5 per cent and add to the balance sheets of major central banks, which have already swelled 40 per cent since mid-2007.
Monetary policy makers have been at the forefront of efforts to insulate economies from the crises that began to rage in August 2007. They have sometimes acted together, most famously in October 2008 when they cut interest rates in unison. Last year they intervened to check a soaring yen and six of them made it cheaper for banks to borrow dollars in emergencies.
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