The historic piece of global co-ordination marks an effort to curb the risk that the intensification of the credit crisis could lead to a severe global recession.

Policymakers hope the move will shore up confidence and help shock the credit markets back to life. Already shaken by a major bail-out of British banks, the markets gyrated violently all day. The rate cuts were justified strictly in terms of an improved outlook for inflation across the world following signs of mounting economic weakness and collapsing commodity prices.

“The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability,” the central banks said in a statement. “Some easing of global monetary conditions is therefore warranted.”