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| Version 0 | Version 1 |
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| Fed battles to restore confidence | Fed battles to restore confidence |
| (about 1 hour later) | |
| The US central bank is expected to slash interest rates on Tuesday to help boost confidence in the US economy. | The US central bank is expected to slash interest rates on Tuesday to help boost confidence in the US economy. |
| Economists are forecasting that the benchmark US interest rate will be cut by up to 1%. The decision will be made at 1815 GMT (1415 EST). | Economists are forecasting that the benchmark US interest rate will be cut by up to 1%. The decision will be made at 1815 GMT (1415 EST). |
| Policy makers are hoping to ease the credit crisis which caused the emergency sale of investment bank Bear Stearns over the weekend. | Policy makers are hoping to ease the credit crisis which caused the emergency sale of investment bank Bear Stearns over the weekend. |
| Investors will also be watching results from Lehman Brothers and Goldman Sachs. | Investors will also be watching results from Lehman Brothers and Goldman Sachs. |
| Both banks are expected to announce a sharp fall in profits, when they report results later on Tuesday. | Both banks are expected to announce a sharp fall in profits, when they report results later on Tuesday. |
| MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn Merrill Lynch: $14.1bnUBS: $13.5bn Morgan Stanley $9.4bn HSBC: $3.4bnBear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bnBarclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bnJP Morgan Chase: $3.2bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $197mSource: Company reports Timeline: Sub-prime crisisQ&A: Bear Stearns crisis | MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn Merrill Lynch: $14.1bnUBS: $13.5bn Morgan Stanley $9.4bn HSBC: $3.4bnBear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bnBarclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bnJP Morgan Chase: $3.2bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $197mSource: Company reports Timeline: Sub-prime crisisQ&A: Bear Stearns crisis |
| Lehman Brothers shares plunged 20% on Monday, its biggest ever one-day fall. | Lehman Brothers shares plunged 20% on Monday, its biggest ever one-day fall. |
| Investors were panicked by the sale of rival investment bank Bear Stearns over the weekend. | Investors were panicked by the sale of rival investment bank Bear Stearns over the weekend. |
| It faced bankruptcy when clients lost confidence in the firm and started to withdraw funds. | It faced bankruptcy when clients lost confidence in the firm and started to withdraw funds. |
| Many consider the $240m (£120m) price tag paid by JP Morgan Chase to be a bargain. | Many consider the $240m (£120m) price tag paid by JP Morgan Chase to be a bargain. |
| The US Federal Reserve has been trying to restore confidence in the banking business. | The US Federal Reserve has been trying to restore confidence in the banking business. |
| Bank have been unwilling to lend to each other because they are worried about losses on investments backed by US mortgages. | Bank have been unwilling to lend to each other because they are worried about losses on investments backed by US mortgages. |
| Those investments have been hit by the slump in the US housing market. | Those investments have been hit by the slump in the US housing market. |
| To help restore confidence economists expect the Fed to cut the benchmark, Fed funds rate, by between 0.75% and 1%. | To help restore confidence economists expect the Fed to cut the benchmark, Fed funds rate, by between 0.75% and 1%. |
| "There is no reason for the Fed not to be aggressive," said Mark Zandi, chief economist at Moody's Economy.com. | "There is no reason for the Fed not to be aggressive," said Mark Zandi, chief economist at Moody's Economy.com. |
| "The economy is in a recession, the financial system is in disarray and inflation is low," he added. | |
| Do you have any questions on how the world economic situation might affect you? Have you already been hit by tightening credit conditions? Send us your questions and experiences using the form below: | Do you have any questions on how the world economic situation might affect you? Have you already been hit by tightening credit conditions? Send us your questions and experiences using the form below: |