The Federal Reserve, ECB, Bank of England, Sweden’s Risbank, and Bank of Canada all made rate cuts, each of a half a percent; China cut its benchmark rate by 0.27%. The move pared substantial losses in foreign equity markets (the FTSE, which also benefited from a capital injection into stressed banks) is up slightly, and Dow and S&P futures are currently up, the Dow roughly 100 points.
Note that this action left the Fed with some, but not much, firepower. 1% was as low as it went in the last rate cut cycle, and the Fed is probably unwilling to cut beyond that for fear of winding up in Japan style zero interest rate territory.
From Bloomberg:
The Federal Reserve, European Central Bank and four other central banks lowered interest rates in an unprecedented coordinated effort to ease the economic effects of the worst financial crisis since the Great Depression.The Fed, ECB, Bank of England, Bank of Canada and Sweden’s Riksbank each cut their benchmark rates by half a percentage point. The Bank of Japan, which didn’t participate in the move, said it supported the action. Switzerland also took part. Separately, China’s central bank lowered its key one-year lending rate by 0.27 percentage point….
“Central banks of the world have finally woken up to the gravity of the current situation,” Charles Diebel, head of European rates strategy at Nomura International Plc in London, wrote in a note. “It is not potentially not the last we will see of central bank activity particularly in Europe as the macro situation is still weakening dramatically.”
The Fed reduced its benchmark rate to 1.5 percent. The ECB’s main rate is now 3.75 percent; Canada’s fell to 2.5 percent; the U.K.’s rate dropped to 4.5 percent; and Sweden’s rate declined to 4.25 percent. China cut interest rates for the second time in three weeks, reducing the main rate to 6.93 percent.
Here is the text of the Fed’s statement.
Liquidity Trap 
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I know in theory why this helps, but I fail to see how it’s going to help. The TED spread as I type is now up to 4% and GE (!!) even is sounding quite alarmed about its ability to roll over its commercial paper.
Since they have thrown so much money into short term liquidity and all the credit markets still are seized up, how will a minor rate cut unfreeze them?