Credit crunch claims UK casualty

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Credit crunch claims UK casualty

Credit crunch claims UK casualty

Fri Sep 14, 2007 10:37am EDT

By Ruth Pitchford

LONDON (Reuters) - Credit markets took another hit as the Bank of England bailed out Britain's biggest casualty so far in the global credit crunch while policymakers differed over the best way to restore liquidity to money markets.

The world's biggest central banks have held off from raising benchmark rates in the past few weeks as the usual heavy flows of interbank lending have dried up, driving up market interest rates, and investors are betting the U.S. Federal Reserve will cut its main policy rate next week.

China raised its key rates on Friday for the fifth time this year, seeking to curb inflation, while the Swiss National Bank poured more cheap funding into the short-term lending market a day after raising its key interest rate target.

European Central Bank policymaker Yves Mersch ruled out cutting the bank's emergency lending rate, as the Fed has done, unless conditions on euro zone credit markets get much worse.

Full story, Source: Reuters