The Kuwait Stock Exchange said the country's Central Bank has cut the discount rate by 0.50 percent to 3.75 percent. It is the third cut in as many months. The exchange says on its website the decision is effective Wednesday. It doesn't elaborate. Kuwait has formed a task force to deal with the effects of the global financial crisis and boost confidence in the economy. Kuwait usually follows the US Federal Reserve in interest rate moves. The Fed said Tuesday it was reducing its target for the federal funds rate to between zero and 0.25 percent, from 1 percent, amid efforts to deal with the most serious financial crisis to hit the world's largest economy since the 1930s. The Federal Reserve's radical step of dropping interest rates to near zero prompted cuts elsewhere on Wednesday and threw the spotlight onto both a Bank of Japan meeting and other available policy measures. Hong Kong followed the Fed with a full point rate cut to a record low of 0.5 percent and Kuwait's central bank reduced its key policy rate by a half-point to 3.75 percent. Norway's central bank is expected to cut its main rate by 100 basis points to 3.75 percent later on Wednesday although a number of economists forecast an even bigger reduction. With US rates now in a zero to 0.25 percent range, the Fed said it would employ “all available tools”, echoing Japan's policy of nearly a decade ago when it flooded banks with money to promote lending. The US is mired in a recession and has dragged much of the world with it, following the meltdown of its housing market in 2007 and the crippling bank losses that resulted. The Fed's move could push the Bank of Japan to cut rates from 0.3 percent on Friday. As government officials pushed the BOJ to take more action, a Reuters poll showed two-thirds of 12 analysts expected a rate cut, and a quarter saw a return to quantitative easing by March. “The BOJ needs to do something and I'm sure they are aware of that. It's likely to cut rates, even to zero,” said Hirokata Kusaba, senior economist at Mizuho Research Institute. Minutes of this month's Bank of England meeting showed a 9-0 vote for this month's full-point UK rate cut and that an even bigger reduction was discussed but then rejected for fear of undermining any lingering confidence about the economy.
