Central banks club together to fight crunch

Some of the world's biggest central banks have joined forces in an attempt to resolve the problems being caused by the credit crunch.

The Bank of England, the Federal Reserve, the European Central Bank and others have said that they will loan billions to commercial banks in an effort to bring interest rates down.

The move has been welcomed by industry organisations, and led to a rally in the stock markets, but some have taken it as an ominous sign of a worsening crisis.

"This news just goes to illustrate again how serious the illiquidity issue in money markets has become," said Ian Kernohan from Royal London Asset Management.

"If it works, and it’s too early to tell at the moment, this action reduces some of the downside risks to growth in 2008, but it doesn’t change my view that the UK economy will slow appreciably or that interest rates will be cut again early next year," Mr Kernohan added.

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