That begs the question why didn't they cut rates overnight?
Expectations were that it would do nothing.
There was an admission that the risks from inflation had eased and that the financial crisis was a risk to growth.
But the global credit freeze worsened with key rates at nine month highs and a measure of lending liquidity pointing towards an all time low: companies the size of Chrysler and ATT continued to report that lending markets were shut down and they couldn't access fresh loans.
Wall Street was lower with the Dow and S&P 500 being taken lower by key industrial stocks such as GE, Caterpillar, Honeywell and Ingersoll Rand which all fell because of the slowing economy.
Eurozone inflation is slowing, down to 3.6% last month from 4% in July, but unemployment is rising, hitting 7.4% up from 7.3% in recent months and the decade-plus low of 7.2% earlier this year.
Just as those hawks on the Fed have gone quiet as the financial pressures have mounted, the hard-line anti-inflationists on the ECB have fallen silent, especially those from Germany where there's egg on the financial establishment's collective face over the near collapse of Hypo Real Estate and its massive $US560 billion of assets.
Lehman Brothers had little more, $US613 billion when it went bust. Questions remain unanswered how Hypo was allowed to gather so many assets, apparently in property, public sector and infrastructure financing.
The European Commission issued new proposed rules to control banks across the 15 state eurozone this week.
They were drawn up before this latest crisis, but after the crunch started in August of 2007 and they already don't go far enough and depend too much on individual country regulators, rather than zone wide supervision by the EC.
They really aren't due until 2012, so it's a bit slow, a bit late and a bit underwhelming.
Ireland exposed the lack of eurozone controls and harmony by guaranteeing the deposits and debts of six of its major financial lenders and set off a flow of money from Britain to the Irish Republic, and in turn sparked a row with the UK Government and concern in Germany and France.
Still unanswered are questions about the operations of a Dublin-based banking business controlled by Hypo Real Estate and how it played a major part in the 50 billion dollar black hole in Hypo's balance sheet last weekend and brought this once proud blue chip to the edge of failure last Sunday night.
That's when the Fortis, the Dutch-Belgium financial group was also staggering towards implosion, with Dexia, a French Belgian bank not far behind.
In Iceland the national government seized control of the country's third largest bank, Glitnir and took it over in exchange for a $US1 billion injection. Ratings agencies downgraded the country's rating and outlook as a result.
All that made the struggle by Bradford and Bingley, once the UK's 8th largest mortgage lender, a bit small.
The good bits, the customers, branches and deposits were sold to Banco Santander (which owns two other former building societies, Abbey and Alliance and Leicester), the loans, good and bad, all $A110 billion of them were nationalised and joined those of Northern Rock.
In the US, the struggling Citigroup grabbed the good bits of Wachovia for just over $US2 billion, an agreement to absorb around $US42 billion in losses, and a top up $US12 billion capital injection by the lead bank regulator which took on all mortgage loan losses above that $US42 billion level.
It was a trailblazing deal: Citigroup raised another $US10 billion in fresh capital and revealed billions of dollars in fresh third quarter losses before Wachovia's bill is met.
Still Citigroup's move was small beer to the chain of near disasters in Europe: they cost 35 billion euros from the German Government and banks for Hypo, more than 11 billion euros for Fortis and around 6.4 billion euros for Dexia.
Hypo has to sell another 15 billion of assets and Fortis has called off the sale of 50% of its funds management business to a Chinese insurer for around 3 billion US dollars. Fortis has to sell ABN Amro assets it was supposed to buy in the three way takeover with RBS of the UK and Banco Santander.
Two banks in the UK have been nationalised, one forcibly merged into another (HBOS into Lloyds TSB).
Northern Rock and Bradford and Bingley were effectively nationalised, or taken over, split up and then nationalised, Alliance and Leicester was taken over by Santander, which had taken out Abbey a year or so ago.
Around 25 banks and major financial groups have failed or been bailed out since the crunch erupted in August of 2007.
From IKB, the first in Germany, to Dexia, the latest in Belgium, it's a multi-billion dollar toll of loans and fresh capital injections on a size only seen in the US.
Ireland has given a two year guarantee on deposits and loans at the country's six leading financial groups and banks, a move that has sent tremors through Europe.
Coupled with the banking debacle known as UBS and its $US50 billion in losses, plus smaller but still hurtful losses at Credit Suisse, Deutsche Bank and through the French banking system, the continent financial sector has been weakened to the point where there are growing fears about stability.
The problem has now gone from one being solely in Britain to one where the fears and concerns are sweeping across the eurozone.
The UK will lift the level of guarantee on its savings in banks to combat the move by Ireland. The Irish Government is in disarray and has brought its national budget forward by seven weeks.
Gordon Brown, the UK prime minister is facing growing pressure to extend the guarantees on British savers' bank deposits from 35,000 pounds to 50,000 pounds after the Irish move.
UK media reports say that billions of pounds have headed for the Irish and other banks with guarantees.
London's Telegraph reported that "Currently, only the Post Office - whose savings accounts are run by the Bank of Ireland, the taxpayer-backed Northern Rock and National Savings & Investments - the Government's savings scheme - offer a similar guarantee.
"The volume of interest was so great yesterday that Northern Rock was forced to pull its most popular account, and Anglo Irish Bank was not able to answer any more customer calls.
"According to analysts, billions of pounds has left British banks and entered either one of the Irish banks directly or the Post Office."
The Irish government's emergency move was agreed by cabinet in Dublin on Monday night and bank executives at a late-night meeting on Monday amid concerns about a run on an Irish bank and has sent a big split through the idea of a single market in banking services across the eurozone economies.
It raised the stakes in the state intervention sweeping Europe's banking sector from supporting individual banks and groups, to supporting an industry as a whole.
The French Finance Minister, Christine Lagarde caused a row by raising the possibility of a European fund to support the financial sector.
But the idea of a fund, which some European officials said could hold as much as 300 billion euros ($US 420 billion), was rejected by Germany, with Britain unhappy at the idea and the Irish move. France retreated.
The Financial Times reported that "officials at the Bank of England and Treasury are working on several plans in case the need arises for a more co-ordinated approach".
The EU's plans for higher capital requirements and tougher regulation ran into opposition from governments in Poland and other Eastern European countries with less robust banking systems.
In Italy the aggressive UniCredit bank lost value as investors worried about its overseas expansion and ownership of the HVB Bank in Germany, from which Hypo Real Estate was spun off. Some investors wondered if the Italian giant would suffer any collaterall damage from Hypo's problems.
Perhaps the answer at Hypo and what happened might rest in what's behind these two management changes from HRE.
The board member of HRE and Depfa responsible for long term funding and treasury within Depfa and for "Public Sector and Infrastructure Finance" within the group has gone, as a second executive, the Dublin-based CEO of Depfa for the past year where he had responsibility for Public Sector Origination and Infrastructure Finance.
That's a big hint.
