European businesses applaud global rate cuts

By Marcin Grajewski

BRUSSELS (Reuters) - Europe's top business group lauded interest rate cuts around the world on Wednesday, saying they should help ease the global financial crisis by boosting investment and consumption.

But BusinessEurope, which speaks for some 20 million European companies, has cut its economic growth forecast for the 15-country euro zone this year to below the 1.3 percent expected by the European Commission due to the economic turmoil.

"We have ... reasons to applaud this (rate) decision: lowering interest rates we believe will fuel investment and consumption, help the banks to recover and restore confidence on the markets," BusinessEurope President Ernest-Antoine Seilliere told Reuters in an interview.

Central banks around the world cut interest rates in unison in a joint response to the global financial crisis.

The U.S. Federal Reserve said it was cutting its key federal funds rate by 50 basis points to 1.5 percent. China, the European Central Bank (ECB) and central banks in Britain, Canada, Sweden and Switzerland also cut rates in the coordinated response, which analysts had been demanding.

"It is something that will lower the costs of distribution of credit. I cannot say it solves the credit crunch issue by itself, but it contributes to the solution," Seilliere said.

"We are really satisfied, it shows the capacity to act at the world level."

He said the banks' operation should be an example for European governments to act faster and in a more coordinated way on issues such as banking and insurance supervision, rating agencies and accounting rules.